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Banks shouldn't be put in the position of public policy making. If society thinks certain activities are desired/undesired, this can be accomplished via taxes a

Banks shouldn't be put in the position of public policy making. If society thinks certain activities are desired/undesired, this can be accomplished via taxes and regulations. Financial cancel culture is a road to hell laid with good intentions.

Analemma_ 5y ago
Climate change from burning fossil fuels is also a road to hell laid with good intentions. Have you done the cost-benefit analysis on which is worse?
MereInterest 5y ago
Except then people come out of the woodwork to say that government shouldn't be legislating morals, and that if it's really an issue investors would avoid investing in funds they find immoral. Which is exactly what's happening here.
- bradleyjg 5y ago
  The right answers are leaf nodes—-either voters or consumers. If consumers act, intermediary institutions like banks will naturally follow. Ditto if the laws change.
  - nullspace 5y ago
    I think it’s kinda weird that you exclude investors out of the leaf node, which is what is happening here.
    - bradleyjg 5y ago
      The big investors in this case are themselves intermediary institutions.
  - fakedang 5y ago
    Except in this case, consumers can't act. Can consumers vote with their wallets to prevent using technologies that are excessively polluting, say a necessary chemical which they use only indirectly, one that has a polluting manufacturing process? Can poorer car buyers opt for any thing cheaper than the currently available options? Or rather, because there are no options available for them, should they simply not use cars instead of using the polluting gasoline cars?
    - bradleyjg 5y ago
      Should that choice be taken out of their hands by non-elected intermediary institutions? Because that’s what’s going on here.
      - fakedang 5y ago
        There wasn't even much of a choice in the first place.
      - triceratops 5y ago
        > choice be taken out of their hands by non-elected intermediary institutions Why can't they go to a different bank if they feel so strongly about it?
    - gruez 5y ago
      >Except in this case, consumers can't act. Can consumers vote with their wallets to prevent using technologies that are excessively polluting, say a necessary chemical which they use only indirectly, one that has a polluting manufacturing process? Pesticides are a necessary chemical to industrial food production. Consumers can opt to prevent that from being used/manufactured by buying organic[1]. Organic goods are widely available in US supermarkets. The fact that organics haven't outpaced conventional foods tells you all you need to know about consumer preferences. >Can poorer car buyers opt for any thing cheaper than the currently available options? Or rather, because there are no options available for them, should they simply not use cars instead of using the polluting gasoline cars? So according to you, poor car buyers are forced to choose between a gas guzzler or no car at all, because the fuel efficient cars are too expensive. Clearly the right thing to do is... stop gas guzzlers from manufactured in the first place so they're forced to not have a car? [1] organic allows certain kinds of "natural" pesticides, which might or might not be worse than their banned counterparts, but this is another can of worms
  - triceratops 5y ago
    Consumers and investors are free to find different banks if they disagree with these policies. These banks believe this is what their customers actually want them to do.
- throwaway0a5e 5y ago
  Why is that a problem? If there's not sufficient voter support for legislating morals then democracies shouldn't be legislating morals. The voters should get what they want even if it's stupid.
  - MereInterest 5y ago
    I wasn't trying to imply that there was. More that any push toward long-term stability gets a ridiculous amount of pushback on the methods. If it is done through legislation, the free-market libertarians come out in droves to say "No! Let the market decide!" If it is done through market forces, the free-market libertarians come out in droves to say "No! The market should be amoral and profit-oriented! Let legislation decide!" I recognize that these may be entirely separate subsets of free-market libertarians, but it's enough to make me grow frustrated at the entire group.
ForHackernews 5y ago
They already are: Banks fund certain things and don't fund others. There's no 'neutral' choice on offer here. I'd much rather banks and investors were explicit and public about the values driving their choices. If your hypothesis is right that the big banks are leaving money on the table, I'm sure somebody will start a tobacco/child labour/fossil fuels ETF investors can buy if they can stomach it.
- fakedang 5y ago
  > If your hypothesis is right that the big banks are leaving money on the table, I'm sure somebody will start a tobacco/child labour/fossil fuels ETF investors can buy if they can stomach it. The optics of such a nonsense ETF would itself drive investors away. Like seriously?
  - tzs 5y ago
    Tobacco companies and fossil fuel companies have no trouble finding investors, so it doesn't seem all that nonsensical that an ETF based on those industries would have no trouble getting investors.
  - thinkcontext 5y ago
    The existence of several vice ETF's undermines your thesis.
elliekelly 5y ago
I don’t disagree but money is speech and corporations are people so why wouldn’t banks and their investors flex their enormous spending power to influence public policy? Banks aren’t victims “put” in this position - they’re largely the beneficiaries of it.
nickelcitymario 5y ago
Every person and institution has a right to decide what things they're willing to support with their money. That's why we have the expression "voting with your wallet". If a bank decides not to invest in some given company or sector, that's not "public policy making". That's just the bank exercising their right to decide where to put their money. Indeed, they can't do anything less. Whether they invest or not, they are making a decision that has social impacts. If the bank instead paid lobbyists to persuade politicians to create new rules (and I'm sure they do), that would be closer to "public policy making". Also, this concept of "cancel culture" is absurd. People and companies have always risked falling from public grace if they say or do things that go against the values of the majority of the public. Was it "cancel culture" when Studio 54 got shut down? Or when Tim Leary got fired from Harvard? Or when Ellen's sitcom got cancelled? Right or wrong, each was merely the result of going against the grain. Today, the cultural middle has shifted, and so some groups are finding themselves in a position they're unaccustomed to: being in the minority. (Or more accurately: not being _consistently_ in the majority.) But the consequences are no different than those faced by any minority, and this is healthy for society. It's never a good thing when one group has so much social leverage that they get to dictate the terms for everybody else. I would argue that today, there's no such thing as a majority group. We're all minorities to varying degrees, and we all need to learn how to get along. I think that's a net positive, albeit a very messy one.
- BitwiseFool 5y ago
  There is a big difference between an individual "voting with their wallet" and foundational institutions like banks pursuing activist policies.
  - cortesoft 5y ago
    But how is this different than any other investment choice they make trying to maximize their profits? Investors and banks are looking at the data and thinking, “if we don’t do something about climate change, it will really hurt our long term profits”, so they use their power to prevent the thing that will lower their profits. Isn’t that what a corporation is supposed to do?
belorn 5y ago
On that note, society should really stop subsidizing fossil fueled power production. Any action that the financial industry do has limited power if government simply gives the biggest carbon emission players more money in order for them to continue emitting carbon in the name of stable and cheap energy.
mistrial9 5y ago
there is a middle ground in the Western finance system -- willing participants declare themselves and band together with market positioning and customer information. Agree here that soft-rules to exclude finance will cause a lot of negative results, expected and otherwise. People that complain finance will not voluntarily comply are right, most finance activity specifically and actively "does not care" and this also must be exposed publicly. Sunlight is a strong disinfectant. ps- per piketty [0] the finance system is currently self-perpetuating, no longer solely an expression of real value. Humans are proven dangerous, so, take care with "laws" https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
burkaman 5y ago
How is this different than a bank denying a loan to someone with bad credit? Giving money to polluters is financially risky, because they destabilize the economy and shrink your customer pool.
- eloff 5y ago
  Because they don't have bad credit. This is more similar to how some banks reuse service to pornstars. If banks are making decisions for non financial reasons that seems problematic to me. If they really see it as a risky investment, that's fine.
  - burkaman 5y ago
    I can only find news articles about this, not a release from IIGCC itself, but financial risk is clearly at least part of their rationale: > Bruce Duguid, head of stewardship at Federated Hermes’ EOS division, said there was a need for “dramatic shifts” in bank financing in order to meet the Paris goals and “avoid the looming systemic risk of a ‘carbon crunch’ hitting their balance sheets”. It seems pretty straightforward that investing in something that violates a global UN agreement is not a financially sound decision.
  - ForHackernews 5y ago
    What about refusing service to marijuana businesses? There's both a real and perceived regulatory and reputational risk in giving money to these types of companies.
    - elliekelly 5y ago
      That’s a bit different because, for now at least, a bank knowingly doing business with a marijuana company violates BSA and AML regulations. The adult entertainment industry is also frequently refused banking services by citing the same laws and regulations but those aren’t flat-out prohibited where marijuana is because it’s a criminal enterprise in the eyes of the federal government. Funds coming from adult entertainment are (1) high risk (in theory) for being proceeds from a crime (prostitution) and (2) high risk for money laundering because those businesses are often high cash or cash-only. You can see how designating a business as #1 necessarily creates the situation that gives rise to #2 and so it becomes a self-fulfilling prophecy: the business is high risk because it’s high risk.
Gadiguibou 5y ago
I don't think that's really what's happening here. Banks have been choosing who they fund and who they don't for a while and it hasn't really been decried so far. This only highlights that we live in a society that is both democratic AND capitalist: decision making power is distributed, on the one hand, "equally" to each citizen via voting rights, and, on the other hand, to whomever holds the most capital. You could even argue that the proportion of the power that goes to capitalists is inversely proportional to the amount of state actions in the form of redistributive policies, market legislation, etc. Once you take this into consideration, your initial observation doesn't reflect a new financial "cancel culture". Rather it reflects how much of the decision making power is now in the hands of capitalists in the US.
triceratops 5y ago
Banks are doing what they believe their customers and investors want them to do. If they're wrong, they'll lose market share and profits to banks that don't do this. It's not cancel culture, it's capitalism.
gremlinsinc 5y ago
This is literally the path that capitalism laid out. Either you're for or against the system. Capitalism's end game was not to be counted a citizen but to become the oligarchy. Congress has a lot of power but only what the people give them, well the people have lost most of their voice/power so now congress is fueled by the power that money can buy from the companies that fund them. Thus it is we've entered late-stage capitalism. The federal government won't ever do anything about it as long as they're allowed to control congress by the wallet. Short-term as myself a libertarian-socialist I see this as a positive - because the alternative is lots of death from climate change... Long-term as a libertarian-socialist, I see this as a scary power grab by corporations. In some movies/shows/books you see companies that govern and have whole worlds and solar systems named after them. When you take away regulations, when you move to allow companies total freedom to do whatever you want you have to be willing to take the consequences of whatever those freedoms bring, whether that's polluting the water supply or encouraging MLB to pull out of Georgia over voter rights. You can't have your cake and eat it too!

Analemma_ 5y ago

Climate change from burning fossil fuels is also a road to hell laid with good intentions. Have you done the cost-benefit analysis on which is worse?

MereInterest 5y ago

Except then people come out of the woodwork to say that government shouldn't be legislating morals, and that if it's really an issue investors would avoid investing in funds they find immoral. Which is exactly what's happening here.

bradleyjg 5y ago
The right answers are leaf nodes—-either voters or consumers. If consumers act, intermediary institutions like banks will naturally follow. Ditto if the laws change.
- nullspace 5y ago
  I think it’s kinda weird that you exclude investors out of the leaf node, which is what is happening here.
  - bradleyjg 5y ago
    The big investors in this case are themselves intermediary institutions.
- fakedang 5y ago
  Except in this case, consumers can't act. Can consumers vote with their wallets to prevent using technologies that are excessively polluting, say a necessary chemical which they use only indirectly, one that has a polluting manufacturing process? Can poorer car buyers opt for any thing cheaper than the currently available options? Or rather, because there are no options available for them, should they simply not use cars instead of using the polluting gasoline cars?
  - bradleyjg 5y ago
    Should that choice be taken out of their hands by non-elected intermediary institutions? Because that’s what’s going on here.
    - fakedang 5y ago
      There wasn't even much of a choice in the first place.
    - triceratops 5y ago
      > choice be taken out of their hands by non-elected intermediary institutions Why can't they go to a different bank if they feel so strongly about it?
  - gruez 5y ago
    >Except in this case, consumers can't act. Can consumers vote with their wallets to prevent using technologies that are excessively polluting, say a necessary chemical which they use only indirectly, one that has a polluting manufacturing process? Pesticides are a necessary chemical to industrial food production. Consumers can opt to prevent that from being used/manufactured by buying organic[1]. Organic goods are widely available in US supermarkets. The fact that organics haven't outpaced conventional foods tells you all you need to know about consumer preferences. >Can poorer car buyers opt for any thing cheaper than the currently available options? Or rather, because there are no options available for them, should they simply not use cars instead of using the polluting gasoline cars? So according to you, poor car buyers are forced to choose between a gas guzzler or no car at all, because the fuel efficient cars are too expensive. Clearly the right thing to do is... stop gas guzzlers from manufactured in the first place so they're forced to not have a car? [1] organic allows certain kinds of "natural" pesticides, which might or might not be worse than their banned counterparts, but this is another can of worms
- triceratops 5y ago
  Consumers and investors are free to find different banks if they disagree with these policies. These banks believe this is what their customers actually want them to do.
throwaway0a5e 5y ago
Why is that a problem? If there's not sufficient voter support for legislating morals then democracies shouldn't be legislating morals. The voters should get what they want even if it's stupid.
- MereInterest 5y ago
  I wasn't trying to imply that there was. More that any push toward long-term stability gets a ridiculous amount of pushback on the methods. If it is done through legislation, the free-market libertarians come out in droves to say "No! Let the market decide!" If it is done through market forces, the free-market libertarians come out in droves to say "No! The market should be amoral and profit-oriented! Let legislation decide!" I recognize that these may be entirely separate subsets of free-market libertarians, but it's enough to make me grow frustrated at the entire group.

ForHackernews 5y ago

They already are: Banks fund certain things and don't fund others. There's no 'neutral' choice on offer here. I'd much rather banks and investors were explicit and public about the values driving their choices. If your hypothesis is right that the big banks are leaving money on the table, I'm sure somebody will start a tobacco/child labour/fossil fuels ETF investors can buy if they can stomach it.

fakedang 5y ago
> If your hypothesis is right that the big banks are leaving money on the table, I'm sure somebody will start a tobacco/child labour/fossil fuels ETF investors can buy if they can stomach it. The optics of such a nonsense ETF would itself drive investors away. Like seriously?
- tzs 5y ago
  Tobacco companies and fossil fuel companies have no trouble finding investors, so it doesn't seem all that nonsensical that an ETF based on those industries would have no trouble getting investors.
- thinkcontext 5y ago
  The existence of several vice ETF's undermines your thesis.

elliekelly 5y ago

I don’t disagree but money is speech and corporations are people so why wouldn’t banks and their investors flex their enormous spending power to influence public policy? Banks aren’t victims “put” in this position - they’re largely the beneficiaries of it.

nickelcitymario 5y ago

Every person and institution has a right to decide what things they're willing to support with their money. That's why we have the expression "voting with your wallet". If a bank decides not to invest in some given company or sector, that's not "public policy making". That's just the bank exercising their right to decide where to put their money. Indeed, they can't do anything less. Whether they invest or not, they are making a decision that has social impacts. If the bank instead paid lobbyists to persuade politicians to create new rules (and I'm sure they do), that would be closer to "public policy making". Also, this concept of "cancel culture" is absurd. People and companies have always risked falling from public grace if they say or do things that go against the values of the majority of the public. Was it "cancel culture" when Studio 54 got shut down? Or when Tim Leary got fired from Harvard? Or when Ellen's sitcom got cancelled? Right or wrong, each was merely the result of going against the grain. Today, the cultural middle has shifted, and so some groups are finding themselves in a position they're unaccustomed to: being in the minority. (Or more accurately: not being _consistently_ in the majority.) But the consequences are no different than those faced by any minority, and this is healthy for society. It's never a good thing when one group has so much social leverage that they get to dictate the terms for everybody else. I would argue that today, there's no such thing as a majority group. We're all minorities to varying degrees, and we all need to learn how to get along. I think that's a net positive, albeit a very messy one.

BitwiseFool 5y ago
There is a big difference between an individual "voting with their wallet" and foundational institutions like banks pursuing activist policies.
- cortesoft 5y ago
  But how is this different than any other investment choice they make trying to maximize their profits? Investors and banks are looking at the data and thinking, “if we don’t do something about climate change, it will really hurt our long term profits”, so they use their power to prevent the thing that will lower their profits. Isn’t that what a corporation is supposed to do?

belorn 5y ago

On that note, society should really stop subsidizing fossil fueled power production. Any action that the financial industry do has limited power if government simply gives the biggest carbon emission players more money in order for them to continue emitting carbon in the name of stable and cheap energy.

mistrial9 5y ago

there is a middle ground in the Western finance system -- willing participants declare themselves and band together with market positioning and customer information. Agree here that soft-rules to exclude finance will cause a lot of negative results, expected and otherwise. People that complain finance will not voluntarily comply are right, most finance activity specifically and actively "does not care" and this also must be exposed publicly. Sunlight is a strong disinfectant. ps- per piketty [0] the finance system is currently self-perpetuating, no longer solely an expression of real value. Humans are proven dangerous, so, take care with "laws" https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...

burkaman 5y ago

How is this different than a bank denying a loan to someone with bad credit? Giving money to polluters is financially risky, because they destabilize the economy and shrink your customer pool.

eloff 5y ago
Because they don't have bad credit. This is more similar to how some banks reuse service to pornstars. If banks are making decisions for non financial reasons that seems problematic to me. If they really see it as a risky investment, that's fine.
- burkaman 5y ago
  I can only find news articles about this, not a release from IIGCC itself, but financial risk is clearly at least part of their rationale: > Bruce Duguid, head of stewardship at Federated Hermes’ EOS division, said there was a need for “dramatic shifts” in bank financing in order to meet the Paris goals and “avoid the looming systemic risk of a ‘carbon crunch’ hitting their balance sheets”. It seems pretty straightforward that investing in something that violates a global UN agreement is not a financially sound decision.
- ForHackernews 5y ago
  What about refusing service to marijuana businesses? There's both a real and perceived regulatory and reputational risk in giving money to these types of companies.
  - elliekelly 5y ago
    That’s a bit different because, for now at least, a bank knowingly doing business with a marijuana company violates BSA and AML regulations. The adult entertainment industry is also frequently refused banking services by citing the same laws and regulations but those aren’t flat-out prohibited where marijuana is because it’s a criminal enterprise in the eyes of the federal government. Funds coming from adult entertainment are (1) high risk (in theory) for being proceeds from a crime (prostitution) and (2) high risk for money laundering because those businesses are often high cash or cash-only. You can see how designating a business as #1 necessarily creates the situation that gives rise to #2 and so it becomes a self-fulfilling prophecy: the business is high risk because it’s high risk.

Gadiguibou 5y ago

I don't think that's really what's happening here. Banks have been choosing who they fund and who they don't for a while and it hasn't really been decried so far. This only highlights that we live in a society that is both democratic AND capitalist: decision making power is distributed, on the one hand, "equally" to each citizen via voting rights, and, on the other hand, to whomever holds the most capital. You could even argue that the proportion of the power that goes to capitalists is inversely proportional to the amount of state actions in the form of redistributive policies, market legislation, etc. Once you take this into consideration, your initial observation doesn't reflect a new financial "cancel culture". Rather it reflects how much of the decision making power is now in the hands of capitalists in the US.

triceratops 5y ago

Banks are doing what they believe their customers and investors want them to do. If they're wrong, they'll lose market share and profits to banks that don't do this. It's not cancel culture, it's capitalism.

gremlinsinc 5y ago

This is literally the path that capitalism laid out. Either you're for or against the system. Capitalism's end game was not to be counted a citizen but to become the oligarchy. Congress has a lot of power but only what the people give them, well the people have lost most of their voice/power so now congress is fueled by the power that money can buy from the companies that fund them. Thus it is we've entered late-stage capitalism. The federal government won't ever do anything about it as long as they're allowed to control congress by the wallet. Short-term as myself a libertarian-socialist I see this as a positive - because the alternative is lots of death from climate change... Long-term as a libertarian-socialist, I see this as a scary power grab by corporations. In some movies/shows/books you see companies that govern and have whole worlds and solar systems named after them. When you take away regulations, when you move to allow companies total freedom to do whatever you want you have to be willing to take the consequences of whatever those freedoms bring, whether that's polluting the water supply or encouraging MLB to pull out of Georgia over voter rights. You can't have your cake and eat it too!