7 ms·

To be fair, any bank can freeze your account for any reason. You can mitigate this somewhat by having accounts with multiple banks, but even then they can all

by 41209 5y ago

To be fair, any bank can freeze your account for any reason. You can mitigate this somewhat by having accounts with multiple banks, but even then they can all be frozen at once. The benefit of a traditional bank is at least you can show up with an ID and beg for your money. Chime does indeed market to those who aren't financially doing great, but it's a very complicated situation. Everyone should have a minimum of 3 months in living expenses saved, but very few do

quanticle 5y ago
And what good does it do me to have three months, six months, or heck 3 years worth of living expenses saved if the financial institution I've saved it with tells me that the account has been closed and the funds have been confiscated? We make fun of old people who lived through the Great Depression for keeping their money as cash or gold, but if this is the future of finance, well, gold bars under the mattress are looking batter and better with each passing day.
- gruez 5y ago
  >And what good does it do me to have three months, six months, or heck 3 years worth of living expenses saved if the financial institution I've saved it with tells me that the account has been closed and the funds have been confiscated You have those funds spread out across multiple accounts, so if one goes down you still have access to some cash. you know, like a high availability cluster.
  - R0b0t1 5y ago
    They're talking about an event such as being put on the terrorism no banking list, or being abused with lawsuits that you can't win and having your money stolen via those lawsuits. It'd take having physical, inconfiscable assets to protect from that.
    - gruez 5y ago
      > They're talking about an event such as being put on the terrorism no banking list, or being abused with lawsuits that you can't win and having your money stolen via those lawsuits. That's not the impression I got. I was thinking of your account being closed by mistake because of fraud/AML system false positives, not because the legal system was invoked against you.
  - lp0_on_fire 5y ago
    Or, you know, we could champion legislation that would prevent these banking institutions from arbitrarily seizing your money.
    - gruez 5y ago
      Even if you're sure you don't have flaky hardware, you should still have multiple servers with failover. In the same way, even if you're sure that the law is on your side when it comes to arbitrary seizures, you should keep multiple accounts.
- xtracto 5y ago
  >We make fun of old people who lived through the Great Depression for keeping their money as cash or gold, but if this is the future of finance, well, gold bars under the mattress are looking batter and better with each passing day. If only we had some way to store value that was more liquid and easier to store than pieces of gold...!
azinman2 5y ago
But if any bank could freeze these assets, where do you suggest the 3 months be stored? Bitcoin? Under your mattress?
- rpmisms 5y ago
  Yes and yes?
mindslight 5y ago
The feature that has been lost was actually a property of writing checks. When you use a debit card, or use a website to make an online payment, you're ultimately asking permission and the bank is free to say "no" with little repercussion. Whereas if you write a check on your account, pass it to someone else, who passes it to their bank, who presents it to your bank, your bank wantonly dishonoring the check would result in a much larger fallout. Push transactions also put the paying bank on the hook for whether the transaction was fraudulent or not. Whereas with a pull transaction, it is up to the receiving bank to clean up the mess from any fraud. This is why banks (especially smaller banks) will put daily limit on the ACH transfers you can initiate, but will process whatever externally-initiated ACHs land on your account.
- gruez 5y ago
  >Whereas if you write a check on your account, pass it to someone else, who passes it to their bank, who presents it to your bank, your bank wantonly dishonoring the check would result in a much larger fallout. I doubt that the law would be on your side if the bank called and told you that your account was closed, and you continued writing checks. At best that would prevent situations mentioned in the article where your account was frozen without your notice, but you'll still be out $10k while that's being resolved.
  - mindslight 5y ago
    Yes, obviously if you have received notice your account is closed, and you continue writing checks, you're on the hook for writing bad checks. The point is that any in flight checks would cause a problem for the banks, which discourages traditional banks from adopting "innovative" ideas like freezing accounts en masse based on machine learning snake oil.
    - gruez 5y ago
      >The point is that any in flight checks would cause a problem for the banks, which discourages traditional banks from adopting "innovative" ideas like freezing accounts en masse based on machine learning snake oil. Is this what's happening here? The way I read the story it sounded like they froze the account and then the customer only noticed because her card was declined, rather than her account being frozen because she tried to use it. Even if the banks couldn't do "in flight checks" (because people use checks rather than debit cards), it doesn't prevent them from using "machine learning snake oil" to randomly close accounts.

by 41209 5y ago

quanticle 5y ago

And what good does it do me to have three months, six months, or heck 3 years worth of living expenses saved if the financial institution I've saved it with tells me that the account has been closed and the funds have been confiscated? We make fun of old people who lived through the Great Depression for keeping their money as cash or gold, but if this is the future of finance, well, gold bars under the mattress are looking batter and better with each passing day.

gruez 5y ago
>And what good does it do me to have three months, six months, or heck 3 years worth of living expenses saved if the financial institution I've saved it with tells me that the account has been closed and the funds have been confiscated You have those funds spread out across multiple accounts, so if one goes down you still have access to some cash. you know, like a high availability cluster.
- R0b0t1 5y ago
  They're talking about an event such as being put on the terrorism no banking list, or being abused with lawsuits that you can't win and having your money stolen via those lawsuits. It'd take having physical, inconfiscable assets to protect from that.
  - gruez 5y ago
    > They're talking about an event such as being put on the terrorism no banking list, or being abused with lawsuits that you can't win and having your money stolen via those lawsuits. That's not the impression I got. I was thinking of your account being closed by mistake because of fraud/AML system false positives, not because the legal system was invoked against you.
- lp0_on_fire 5y ago
  Or, you know, we could champion legislation that would prevent these banking institutions from arbitrarily seizing your money.
  - gruez 5y ago
    Even if you're sure you don't have flaky hardware, you should still have multiple servers with failover. In the same way, even if you're sure that the law is on your side when it comes to arbitrary seizures, you should keep multiple accounts.
xtracto 5y ago
>We make fun of old people who lived through the Great Depression for keeping their money as cash or gold, but if this is the future of finance, well, gold bars under the mattress are looking batter and better with each passing day. If only we had some way to store value that was more liquid and easier to store than pieces of gold...!

azinman2 5y ago

But if any bank could freeze these assets, where do you suggest the 3 months be stored? Bitcoin? Under your mattress?

rpmisms 5y ago
Yes and yes?

mindslight 5y ago

The feature that has been lost was actually a property of writing checks. When you use a debit card, or use a website to make an online payment, you're ultimately asking permission and the bank is free to say "no" with little repercussion. Whereas if you write a check on your account, pass it to someone else, who passes it to their bank, who presents it to your bank, your bank wantonly dishonoring the check would result in a much larger fallout. Push transactions also put the paying bank on the hook for whether the transaction was fraudulent or not. Whereas with a pull transaction, it is up to the receiving bank to clean up the mess from any fraud. This is why banks (especially smaller banks) will put daily limit on the ACH transfers you can initiate, but will process whatever externally-initiated ACHs land on your account.

gruez 5y ago
>Whereas if you write a check on your account, pass it to someone else, who passes it to their bank, who presents it to your bank, your bank wantonly dishonoring the check would result in a much larger fallout. I doubt that the law would be on your side if the bank called and told you that your account was closed, and you continued writing checks. At best that would prevent situations mentioned in the article where your account was frozen without your notice, but you'll still be out $10k while that's being resolved.
- mindslight 5y ago
  Yes, obviously if you have received notice your account is closed, and you continue writing checks, you're on the hook for writing bad checks. The point is that any in flight checks would cause a problem for the banks, which discourages traditional banks from adopting "innovative" ideas like freezing accounts en masse based on machine learning snake oil.
  - gruez 5y ago
    >The point is that any in flight checks would cause a problem for the banks, which discourages traditional banks from adopting "innovative" ideas like freezing accounts en masse based on machine learning snake oil. Is this what's happening here? The way I read the story it sounded like they froze the account and then the customer only noticed because her card was declined, rather than her account being frozen because she tried to use it. Even if the banks couldn't do "in flight checks" (because people use checks rather than debit cards), it doesn't prevent them from using "machine learning snake oil" to randomly close accounts.