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So I’m seeing a lot of people talking about financial institutions that are divesting themselves of their relationships with Trump, esp. re: his personal accounts.
As someone who worked in a position that specifically reviewed accounts for closure, I wanted to note a few things:
As someone who worked in a position that specifically reviewed accounts for closure, I wanted to note a few things:
Do not think for a second that this is an altruistic move.
This is not recognition of his deeds as a bad actor, this is not in regards to him as a person. Banks can and do make a ton of money off people like Trump.
This is about risk.
This is not recognition of his deeds as a bad actor, this is not in regards to him as a person. Banks can and do make a ton of money off people like Trump.
This is about risk.
In a closure review, multiple factors are considered: current activity, historical activity, relationships, and political exposure chief among them.
Financial institutions have a responsibility to ensure that their customers who are compliant with state, fed, and int’l AML regs
Financial institutions have a responsibility to ensure that their customers who are compliant with state, fed, and int’l AML regs
But several intangibles are also taken into account, particularly (and this is true of every FI I’ve ever worked at) the risk presented by a given customer.
Risk is evaluated in multiple contexts: risk presented by their activities, their business relationships, their personal relationships and standing. Exposure to legal outcomes is always considered, but a key component of the risk calculation is reputational risk posed to the FI
A customer who is borderline by other lenses of evaluation can (and often is, depending on a given FI) be demarketed purely given the degree of reputational risk they pose the institution if the relationship is made public.
In my previous roles, we made this choice, over and over again. Yes, there are processes in place prior to closure and there are review processes after the recommendation is made, but it often comes down to judgment made by a single investigator.
A friend asked me once if we based our decisions on whether banking somebody made the bank look good or not.
The truth is that yeah; we often did.
Our job wasn’t to serve humanity at large or society; our job was to protect the bank. That’s it.
The truth is that yeah; we often did.
Our job wasn’t to serve humanity at large or society; our job was to protect the bank. That’s it.
So do not think that these FI’s demarketing Trump, his businesses, or his extended family is a reflection of their commitment to any particular political stance or doing what’s right.
They are protecting themselves against the optics of being the bank of Trump. That’s it.
/fin
They are protecting themselves against the optics of being the bank of Trump. That’s it.
/fin
(Okay, and maybe a little bit against the sure-to-be-forthcoming RICO indictments, etc.
But mostly the optics)
But mostly the optics)
