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> a just government and a conscientious regulatory body wouldn't busy itself warning anyone. Regulatory bodies issue warnings all the time, that's one of the m

> a just government and a conscientious regulatory body wouldn't busy itself warning anyone. Regulatory bodies issue warnings all the time, that's one of the most essential functions of a government. Why? Because we don't like it when the government unilaterally acts on our behalf. Warning people is also the cheapest option here, which matters in a society that is constantly obsessed with government spending. There are tons of bank-adjacent services out there (pay-day loans are just one example) and it would cost a fortune in legal fees to force everyone that holds cash for customers to register as a bank. This way, consumers know the risks and businesses don't need to take on excessive regulatory burden. How is that a government failure?

katbyte 3y ago
> How is that a government failure because the people with money there will call it that when they finally loose money, no matter how many warnings are issued.
ouid 3y ago
[flagged]
- dang 3y ago
  We've banned this account for breaking the site guidelines and ignoring our many requests to stop. https://news.ycombinator.com/item?id=34820507 https://news.ycombinator.com/item?id=34820507 (Feb 2023) https://news.ycombinator.com/item?id=33266501 https://news.ycombinator.com/item?id=33266501 (Oct 2022) https://news.ycombinator.com/item?id=33266456 https://news.ycombinator.com/item?id=33266456 (Oct 2022) https://news.ycombinator.com/item?id=22630570 https://news.ycombinator.com/item?id=22630570 (March 2020) https://news.ycombinator.com/item?id=18774144 https://news.ycombinator.com/item?id=18774144 (Dec 2018) https://news.ycombinator.com/item?id=18743106 https://news.ycombinator.com/item?id=18743106 (Dec 2018) If you don't want to be banned, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll follow the rules in the future. They're here: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html.
bumby 3y ago
Not the same as govt failure, but possibly govt ineffectiveness. If all the govt did was warn, we may not have the mental bandwidth to process all that into rational actions. We rely on on institutions to act on our behalf to overcome this limitation. The question is really about where the risk threshold is that transitions their role from warning to regulating.
- LapsangGuzzler 3y ago
  > If all the govt did was warn, we may not have the mental bandwidth to process all that into rational actions. The government does not exist to make sure that you just get the right amount of information that you need so you aren't cognitively overburdened while they handle everything else for you behind the scenes. It's never worked that way. > The question is really about where the risk threshold is that transitions their role from warning to regulating. This came from CFPB, which exists primarily to warn against bad actors in the financial world. They're positioned to do this largely because the finance industry has repeatedly lobbied successfully to block effective regulation. To get around this, Elizabeth Warren created CFPB as an office explicitly to watch how the finance industry interacts with consumers post-2008. The fact that this warning even exists represents an improvement because CFPB was created exactly to do this. They do not have the power to declare who's a bank and who's not. And to be clear, PayPal et al haven't committed any crimes here, CFPB is just pointing out that they're not insured as bank so you can't rely on the government bailing them out. CFPB sued Wells Fargo over the fraudulent account scandal, etc. They're more than capable of acting when crime has occurred. The problem (and this is the product of the finance industry understanding the game) is that a company failing isn't itself a crime. No bank execs went to prison over 2008 because they didn't commit any crimes as the legal system defines them. The best thing the government can do in so many cases is warn people not to be stupid with their money. They can't actually manage it for you.
  - MereInterest 3y ago
    > It's never worked that way. Yes, it has. When the FDA was formed in 1906, it didn’t write memos to notify buyers about the state of the meat-packing industry, it banned them. When thalidomide was found to cause birth defects, it was banned. When the Federal Reserve Act was passed, the result was not just a letter written to customers of specific banks. It brought specific changes on how banks may legally operate.
zzzeek 3y ago
> This way, consumers know the risks going to guess most paypal / venmo users don't read the WSJ and likely missed "CFPB Director Rohit Chopra's Thursday statement" even if 50% of paypal's users did, that means "the government" is servicing only those consumers that have lots of free time and motivation to be reading the business section. for those losers working 12 hour days who lose their money stored up in venmo someday, sucks for them! nope, I like the regulation idea here.
- skybrian 3y ago
  They might see CNN, read Hacker News, or maybe see one of the many other news sources that repeat the CFPB's statement? [1] But yeah, there are probably a lot of people who don't read news at all. I suppose this is what things like public service announcements and billboards are for. [1] https://news.google.com/search?q=CFPB&hl=en-US&gl=US&ceid=US%3Aen https://news.google.com/search?q=CFPB&hl=en-US&gl=US&ceid=US...
- thephyber 3y ago
  This regulator statement is getting echoed in Reuters, AP News, WaPo, Yahoo Finance, CNN, CNet, Fox Business, CNBC, CBS News, Money, Business Insider, etc. This is exactly how popular law changes are announced as well. Do you argue that citizens/people should not be bothered to know the law? For better or worse, US regulation's first line of defense against harm/scams is public information campaigning. It's not clear that the CFPB has any authority to regulate PayPal, Venmo, CashApp, etc for their current business practices. The specific alert described in the article is about helping consumers know the legal / financial differences between these convenient apps and regulated banks.
  - sumedh 3y ago
    > Do you argue that citizens/people should not be bothered to know the law? Police Officers dont have to know the law yet we expect people to know the law.
    - artificialLimbs 3y ago
Johnny555 3y ago
Because we don't like it when the government unilaterally acts on our behalf We're not all libertarians and many of us believe that the government has a hand in promoting a well functioning society -- including regulating bank-like entities to be sure that they are a safe place to keep our cash. While I know that Paypal isn't a bank, it's not at all obvious that my money is less safe stored in my Paypal account than in a bank and that if Paypal goes bankrupt tomorrow, I can lose whatever cash I have with them.
- ryandrake 3y ago
  Exactly. If I had to pick only one job that I want the government to do, it would be coming down like a ton of bricks on companies that are behaving badly and profiting at the people’s expense. Most of the problems in the USA right now can be root caused to “the rich and corporations running roughshod over everything and everyone.”

katbyte 3y ago

> How is that a government failure because the people with money there will call it that when they finally loose money, no matter how many warnings are issued.

ouid 3y ago

[flagged]

dang 3y ago
We've banned this account for breaking the site guidelines and ignoring our many requests to stop. https://news.ycombinator.com/item?id=34820507 https://news.ycombinator.com/item?id=34820507 (Feb 2023) https://news.ycombinator.com/item?id=33266501 https://news.ycombinator.com/item?id=33266501 (Oct 2022) https://news.ycombinator.com/item?id=33266456 https://news.ycombinator.com/item?id=33266456 (Oct 2022) https://news.ycombinator.com/item?id=22630570 https://news.ycombinator.com/item?id=22630570 (March 2020) https://news.ycombinator.com/item?id=18774144 https://news.ycombinator.com/item?id=18774144 (Dec 2018) https://news.ycombinator.com/item?id=18743106 https://news.ycombinator.com/item?id=18743106 (Dec 2018) If you don't want to be banned, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll follow the rules in the future. They're here: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html.

bumby 3y ago

Not the same as govt failure, but possibly govt ineffectiveness. If all the govt did was warn, we may not have the mental bandwidth to process all that into rational actions. We rely on on institutions to act on our behalf to overcome this limitation. The question is really about where the risk threshold is that transitions their role from warning to regulating.

LapsangGuzzler 3y ago
> If all the govt did was warn, we may not have the mental bandwidth to process all that into rational actions. The government does not exist to make sure that you just get the right amount of information that you need so you aren't cognitively overburdened while they handle everything else for you behind the scenes. It's never worked that way. > The question is really about where the risk threshold is that transitions their role from warning to regulating. This came from CFPB, which exists primarily to warn against bad actors in the financial world. They're positioned to do this largely because the finance industry has repeatedly lobbied successfully to block effective regulation. To get around this, Elizabeth Warren created CFPB as an office explicitly to watch how the finance industry interacts with consumers post-2008. The fact that this warning even exists represents an improvement because CFPB was created exactly to do this. They do not have the power to declare who's a bank and who's not. And to be clear, PayPal et al haven't committed any crimes here, CFPB is just pointing out that they're not insured as bank so you can't rely on the government bailing them out. CFPB sued Wells Fargo over the fraudulent account scandal, etc. They're more than capable of acting when crime has occurred. The problem (and this is the product of the finance industry understanding the game) is that a company failing isn't itself a crime. No bank execs went to prison over 2008 because they didn't commit any crimes as the legal system defines them. The best thing the government can do in so many cases is warn people not to be stupid with their money. They can't actually manage it for you.
- MereInterest 3y ago
  > It's never worked that way. Yes, it has. When the FDA was formed in 1906, it didn’t write memos to notify buyers about the state of the meat-packing industry, it banned them. When thalidomide was found to cause birth defects, it was banned. When the Federal Reserve Act was passed, the result was not just a letter written to customers of specific banks. It brought specific changes on how banks may legally operate.

zzzeek 3y ago

> This way, consumers know the risks going to guess most paypal / venmo users don't read the WSJ and likely missed "CFPB Director Rohit Chopra's Thursday statement" even if 50% of paypal's users did, that means "the government" is servicing only those consumers that have lots of free time and motivation to be reading the business section. for those losers working 12 hour days who lose their money stored up in venmo someday, sucks for them! nope, I like the regulation idea here.

skybrian 3y ago
They might see CNN, read Hacker News, or maybe see one of the many other news sources that repeat the CFPB's statement? [1] But yeah, there are probably a lot of people who don't read news at all. I suppose this is what things like public service announcements and billboards are for. [1] https://news.google.com/search?q=CFPB&hl=en-US&gl=US&ceid=US%3Aen https://news.google.com/search?q=CFPB&hl=en-US&gl=US&ceid=US...
thephyber 3y ago
This regulator statement is getting echoed in Reuters, AP News, WaPo, Yahoo Finance, CNN, CNet, Fox Business, CNBC, CBS News, Money, Business Insider, etc. This is exactly how popular law changes are announced as well. Do you argue that citizens/people should not be bothered to know the law? For better or worse, US regulation's first line of defense against harm/scams is public information campaigning. It's not clear that the CFPB has any authority to regulate PayPal, Venmo, CashApp, etc for their current business practices. The specific alert described in the article is about helping consumers know the legal / financial differences between these convenient apps and regulated banks.
- sumedh 3y ago
  > Do you argue that citizens/people should not be bothered to know the law? Police Officers dont have to know the law yet we expect people to know the law.
  - artificialLimbs 3y ago

Johnny555 3y ago

Because we don't like it when the government unilaterally acts on our behalf We're not all libertarians and many of us believe that the government has a hand in promoting a well functioning society -- including regulating bank-like entities to be sure that they are a safe place to keep our cash. While I know that Paypal isn't a bank, it's not at all obvious that my money is less safe stored in my Paypal account than in a bank and that if Paypal goes bankrupt tomorrow, I can lose whatever cash I have with them.

ryandrake 3y ago
Exactly. If I had to pick only one job that I want the government to do, it would be coming down like a ton of bricks on companies that are behaving badly and profiting at the people’s expense. Most of the problems in the USA right now can be root caused to “the rich and corporations running roughshod over everything and everyone.”