Banks Move Suddenly to DEBANK Americans

Mike Maharrey: Greetings. I’m Mike Maharrey and I’m joined today by Jorge Jraissati. He’s the president of the Economic Inclusion Group. I hope I didn’t butcher your name too badly. Jorge, how are you doing? And thank you so much for being on the show.

Jorge Jraissati: No! thank you, Michael. No, you did it perfectly. I have a Lebanese last name so I can understand that it’s not the easiest last name.

Mike Maharrey: Yeah, indeed. And I’m from Kentucky, so everything I say sounds like a hillbilly. Anyway, it’s great to have you on the show. So what I’d like to do just to get started, is to give you a chance to just give folks a little bit of your background and then you can also explain what the economic inclusion group does. So, you kind of package those two things together.

Jorge Jraissati: Of course. Thank you, Michael. I’m from Venezuela originally, and as many people when you live on their socialism, it change your life. It make you more aware about the importance of protecting your freedoms, your economic liberties, your political freedoms. And I have been that way my entire life. At the beginning, I was focusing solely on trying to change a situation in Venezuela, but then I also found that policy group in the US because I saw an issue that not many people discuss. Not many people talk about, but I believe it’s extremely important, which is the issue of de banking, which is a problem that is on the rise, but it’s a silent problem. So, I founded an organization that focuses on those things. We try to do policy reform, we try to advise companies, organizations at the same time and trying to fix this issue.

At least in the US, we don’t have many statistics, but 12,000 people have complained about being de-banked in the past two years. And we believe that it’s actually many more. We have had conversations with companies that have been banked or are in danger of being de-banked, and we’re trying to solve that. And my main motivation is because it will even a society in which if you don’t have financial freedom in which you don’t have your financial actions protected, then you cannot be part of society. You cannot be part of the market. You cannot have any economic freedom. That’s why I’m very passionate about it and from a personal perspective it’s related. But since I came from Venezuela, I lived through hyperinflation, currency controls, capital controls, so I really saw how you really need to protect your finances above anything else.

Mike Maharrey: Yeah, absolutely. It’s interesting you mentioned having grown up in Venezuela and we see reports in the United States of the bread lines and empty shelves and those types of things, and I think a lot of people kind of think, well, it’s probably not really that bad. Maybe this is the worst case, is the portrayal that we see here in the United States of those economic hardships, is that accurate? Was that the reality for you growing up?

Jorge Jraissati: It’s even worse. The reality of the situation is that imagine that you live in a place in which your electricity goes down for a few hours every day, in which you don’t have any security in which you cannot find basic products like food, meat, meat, running water, all these things became really difficult in Venezuela and it was not always that case. Venezuela used to be a rich society, used to be a rich country, the richest in Latin America, and to see how everything deteriorated from normal life towards a humanitarian crisis in a matter of years. It brings you a lot of perspective because I believe that no country is isolated from having these kind of problems.

Mike Maharrey: Yeah, absolutely. It’s hard to imagine that it’s for us here in the United States, but yeah, when I see those videos, my heart just breaks for folks that have to try to exist in that situation. So, let’s talk a little bit about banking. And the term is kind of self-explanatory, like you can’t use the bank anymore, but from I think most people’s perspective, we kind of feel like — go to the bank, we’ll get an account. No problem. How does de-banking happen? What is this process and what are some of the reasons people might find themselves suddenly cut off from the banking system?

Jorge Jraissati: Yes, banking is way more common that people imagine. People have no idea how many companies or foundations or regular people find themselves de-banked for many reasons that I will explain shortly. The way it happens is that you wake up one day and you have a letter from the bank saying that you need to move your money because your account is closed. And you need to do that very fast because if you have a company, as you know, if you don’t have a bank account, then in a few days you can face bankruptcy. And usually this happens to people that have, they were shock when this happens. They were not expecting something like this happen because many people have been 20, 15 years with their bank. So why this is happening? This is happening because of the way regulation has been evolving the US and internationally by the way the Bank Secrecy Act is working or not working by all these regulatory failures that come from hyper-reregulating, the banking system with laws and regulations that are too contradictory that allow the politicization of these regulations that allow the manipulation of these regulations.

So, this is happening to people that, for example, work in areas that could be controversial. So for example, if you are working in the political area, if you have a nonprofit defending free speech or if you have a nonprofit defending any political ideas that you may have, you may become too controversial for banks to have your client because the way regulation is incentivizing the bank to incorporate reputational aspects into the way they do assessment. But it not only happens to political people. It also happens to people that are in industries that are also seen controversial. For example, people who are investing, let’s say in the crypto industry or people who are doing international trade with areas like Latin America, all these people are being de-banked. Imagine that for example, you have an organization that is sending humanitarian aid to Ukraine or to the Middle East or to places like Venezuela. You may become too controversial for financial institutions to have you, but this is a problem because again, if you don’t have access to financial services, you don’t have economic freedom. And we need to have a system in which everybody has access to these services. And if we don’t fix it, and the reason that I’m very involved in this is because I believe that if we don’t fix this in 10 years, the financial system will be so difficult to access for many people in many industries, and a freedom society cannot work in that way.

Mike Maharrey: So you’re almost talking about a situation where somebody in power with political power could say, well, Mike, you operate, let’s say I operate at gun store. Well, we’re a little bit nervous about guns, so we’re not going to do business. You’re talking about things like that where it actually kind of politicizes the banking system and weaponizes it. Is that kind of the way it happens in many cases?

Jorge Jraissati: Yes. So there is two ways that this can happen. One is the one that you Michael described, which is that all these regulations are so vague and so broad are so subjective that any regulator can manipulate them at their will, they can manipulate them directly with their intention to do so. For example, directly weaponizing them against people or industries that they dislike. It can also happen indirectly, for example, if banks preemptively know that certain industries will be problematic, they don’t even need to hear it from regulators. They will just close any account that anything that could be for them an issue. Because no financial institution wants to be in the middle of any anti-money laundering issue or regulatory oversight because it can be hefty fines, it can be problems for the executives. So, then it creates a system in which there is no due process, there is no transparency, and there is no clear guidelines for anybody because I mean if somebody commits a crime, for sure, close their accounts or whatever, but the fact that people that have not committed no crime, that have done anything wrong are facing this problem is very unfair.

Mike Maharrey: Yeah, it’s a classic chilling effect, right? You’ve got a system where people are basically trying to cover their rear ends and maybe going above and beyond what they would have to, but we’re going to rather safe than sorry, I guess is kind of the way you’d put it.

Jorge Jraissati: Yes, exactly. It creates a chilling effect for everybody, for the organizations, for the banks, for the entire economy, and I think the political system also.

Mike Maharrey: Yeah. So I kind of want to go at this from two different angles, looking at solutions to this situation. Let’s start with the policy area. What are some things that you guys are working on from a policy standpoint to maybe make it more difficult to weaponize these regulations?

Jorge Jraissati: Yes, we have been, so this year we have been meeting in meetings with over 80 offices in Congress. So there is interest on solving this issue. We have also made people at the White House, et cetera because Trump himself and his organization was the bank. So, they have some personal interest also on this. Right now there is a few proposals, there’s a few bills in Congress, et cetera, but they don’t go to the heart of the problem. They try to, for example, mandate banks to never bank anybody for political reasons. But the reality is that you need to really fix the Bank Secrecy Act. If you want to solve this problem from the root cause of the problem, you need to make all these financial compliance way more objective, simple to follow, transparent. And there has to be due process for people who are being banked.
If you don’t create these conditions, then all these bills or proposals to solve banking will not work. So what we have been trying is to propose that deep reforms, the Bank Secrecy Act, we are trying to put together, hopefully our recommendations will become a bill in the future or some sort of proposal coming from the White House. But right now what they are proposing is telling banks to not de-bank people. But again, the reality is that when somebody’s been de-banked, the banks never speak up. That is for political reasons. They will never say something like this. They will always say that it’s because of risk analysis, it’s a risk based approach. In fact, they will not tell the customers why they’re being de-banked, not because they’re bad, it’s because they’re not allowed to do so under the bank anti-money launder laws in the US.
So, that’s also something that we have to fix. There also has to be data on this because there is no data, there is no data being collected. There is no data being collected at the bank level or at the national level. And of course many people are also afraid to speak out about this because of the negative consequences that it could have with their investors or if they’re a nonprofit with their donors or with their employees, et cetera. So, collecting the cases is also something that we are working on, but there has to be policy proposals so we can collect cases in a more systematic way. So we’re trying to build up all this and at the same time, we believe that there should be greater protections to people’s financial privacy because right now most people, I believe they’re not aware that all their financial privacy is basically gone.

Mike Maharrey: Yeah, absolutely. And it’s interesting, I saw an article, actually one of my coworkers knew that I was going to be interviewing you and sent this to me, but a CEO named Jack Mallers of a company called Strike, I guess it’s a crypto company. He said that JP Morgan Chase abruptly closed his bank accounts last month, and this was key. And it goes to what you were saying without providing a clear explanation, and when he asked their response was, we aren’t allowed to tell you. So, it’s a real-life example of exactly what you’re saying. If folks think that, oh, he’s exaggerating, no, this is happening. I mean this is within the last month. Are you aware of this case?

Jorge Jraissati: Yes, I’m aware of that case. And I have talked before with him about not the banking, but we have run each other into conferences, et cetera. Specifically, banks are not allowed to tell clients where they’re being, de-banked because the rationale is that the regulation is being written so that banks don’t provide information to people that could potentially be doing something wrong. So, they’re writing the laws in this way, so nobody gets an answer when they’re being de-banked, which is pretty frustrating because imagine if you have 10 or 15 years with a bank and then from one day to the next day close your account. It’s very frustrating. And this is happening in also other areas of society. For example, there are being people put, there are some people who are being put in some sort of a no hiring blacklist, which is not legal, but it’s happening because of bad business practices by some companies. And these people, again, they don’t have a right to know if this is happening to them. So, in many cases, you’re having this lack of transparency in our society that is affecting people directly

Mike Maharrey: And that transparency is fundamental for a free society. We have to know what our government is doing and why they’re doing it, otherwise we’re basically at their mercy. And I don’t know about you, but I don’t like being at the government’s mercy at all.

Jorge Jraissati: I agree with you.

Mike Maharrey: And so to that point, what can we as individuals do to kind of protect ourselves? And maybe if we fear like, “Oh my gosh, I might be one of these people that’s potentially de-banked,” what can people do to kind of prepare themselves knowing that the wheels of change roll slowly in Washington, DC?

Jorge Jraissati: It depends on everybody’s actual personal condition. Because my advice would be very different from depending on which company you work, what kind of business you have, how much liquidity do you need, what is your risk appetite? Also, how public is your profile. So, it’s really case by case, right? I would say that I would say that to people that really need some sort of advising or protection in general for people. The reality is that there’s not much that you can do if you are working in a specific areas. For example, if you have a company that is doing trade between, I don’t know, countries in the Middle East and the us, then you need to spend some money on consultants. You need to spend some money on lawyers and compliance, and you need to try to keep up with all the latest regulation. If I had to give an advice, something that I would say is that most companies only rely on lawyers. And this is a problem because lawyers by default, they are extremely risk adverse and they will just charge you a lot of money.

Lawyers will just try to minimize every ounce of risk. But as you know, a business person, if you minimize every ounce of risk, then there is no profit. There is no profit, and you cannot survive with the amount of money that you will need to pay. I would say to also look for that are at the forefront of this issue for some guidance because we know the specific regulatory issues that are being concerning to companies, the specific regulatory problems that are not on the books, but are on the practice, stuff like that. If you are a citizen who is concerned about this problem and you want to engage, there are several ways to engage. One of them is of course, to speak out about this to your congress person to speak out, to send letters, to do advocacy, to demand that this has to be changed.

Because one of the main issues that we face is that there is so little awareness about this, and there is so little pressure from the public to solve this. This is an issue usually discussed by people, people who have businesses, people who have businesses in specific financial areas. It is still a niche issue, so it has to become more nationwide. So, I think we need to do that. If you are somebody who have been bank or have some documentation, also send it to us so that way we can analyze it. The more cases we have about people who have been banked, the better policy recommendations we can make and also the better examples we can bring when we do our recommendations in Washington.

Mike Maharrey: Yeah, absolutely. Have you seen situations where folks have actually had their assets frozen where they can’t access them from the bank? I mean, we’re talking about de-banking – here’s your money back, go away. That’s one thing. But what about situations where folks might not even be able to access the money? Have we seen that? Is that a possibility, something people should worry about?

Jorge Jraissati: Yes. Yes, of course. I have seen this. Just to clarify on something, even when the bank tells you, “Hey, here’s your money, take it somewhere else,” it is not that easy. It is not that easy for many reasons. And that’s why it’s important to be with an specialist because let’s say you have another account, many people then move the money off on that account to the other account they have, but that only increase the risk profile of the other account they have, which may create a situation in which they’re the bank by the both banks they have about your question. I absolutely have seen the situation in which people’s money is frozen, and this is higher levels of I would say de-banking. But it happens. It definitely happens. It happens a lot of time, sadly. And there is no a timeframe. They can hold your money for a week, they can hold your money for a month, they can hold your money for more time. Again, the lack of transparency is the issue because there is no real timeframe about this.

Mike Maharrey: Yeah, is that essentially what happened to the truck drivers that were protesting some of the COVID policies in Canada?

Jorge Jraissati: Yeah, exactly. And they froze even the money from the GoFundMe. So they froze the money of the GoFundMe and they froze their own money and they never received this money. So, I believe that the GoFundMe, I’m not sure, but I think they raised like $12 million or $7 million or something. This money never reach the trackers.

Mike Maharrey: I had forgotten about that. Yeah, I do remember that. Now that you mentioned it. That’s wild. So, what are your thoughts about holding hard assets like gold and silver, at least in some amount as kind of a backstop in case you do find yourself in that situation?

Jorge Jraissati: Yeah, I believe so. I believe that that’s why so many people have hard assets these days. So I really believe that gold, silver, bitcoin, all these assets are being used in big part because people want to protect themselves from any kind of problem. So, I do believe so. And of course when it comes to gold, I think it’s also a good investment kind of advice these days because of the return. But yeah, it is very important to understand this. It’s very important. Also, there is people who move money around countries to try to protect themselves from the banking, but the reality is that it’s not very, it’s actually another very practical to do. And so yeah, I think that could be having some gold seems to be a good investment advice these days.

Mike Maharrey: Absolutely. What are your thoughts on central bank digital currency and the impact that that could have on the financial system and on the issue of de-banking?

Jorge Jraissati: I mean, it is a problem because it’s a step into the wrong direction. So, it’s to magnify many of the problems that I’m talking about right now of lack of financial privacy, lack of any due process, because then many of these mechanisms will become even more automatic. So, it’s really a problem and it’s really something that we need to also fight against. Digital central backed digital currencies is something that Europeans are moving very fast to make happen, and there is really no use case beyond, I believe, political control because there is no really no use case. There is no use case when it comes to financial stability. There is no use case when it comes to financial inclusion because actually these issues can be solved through other mechanisms.

Mike Maharrey: It feels to me like just more control. And that’s kind of the heart of the problem to begin with. We have a world where governments have a monopoly on money, and that gives them a tremendous pinch point to control people. I mean, that’s really what we’re talking about fundamentally. Would you agree?

Jorge Jraissati: Yes. And the problem with the central bank digital currency is that you will eliminate the few protections that we still have. You will eliminate the few frictions that you still have in the financial system that block this kind of, I would say, yeah, almost totalitarian kind of dystopian future where your bank account will be connected to some artificial intelligence processor, and if you say something that is controversial, then your money is possessed. It’s really problematic. So we don’t want to be close to China.

I think that the US is a great country because citizens have a healthy level of skepticism towards government, towards unregulated power. I really think that the beauty of the system is that you have counterbalances, is that you have check and balances and that you have very strong protections to your individual liberty. And what is more important than money? I don’t think many things. Money is a speech. Money is the way you protect your own family. Money is everything. That’s why I really see that the banking issue, I have been working on it very hard, and I’m still a bit shocked that it’s not a big bigger topic of conversation because if you take away your money and you try to survive with cash, it’s almost impossible.

Mike Maharrey: So many places today won’t even take cash anymore. When I was in DC over the weekend, I was amazed at the number of places where I saw signs, no cash accepted. So we’re definitely moving in that direction. And I think as you mentioned, it’s wise for people to be aware of it and at least have in the back of their heads kind of an alternative plan. What if we all like to think, oh, it won’t happen to me. But you talk about connecting AI to the things that we say that looking back at my past of things that I’ve said, that makes me a little bit nervous.

Jorge Jraissati: Yeah, about the cash thing is that even in Congress, there’s a couple of coffee shops and I invited to Congress a couple of people that don’t have bank accounts because they were de bank, because they were activists from Nicaragua and other countries. And because of that, they lost their bank accounts globally because of their activism, and they could not buy anything because they didn’t accept cash in the Congress coffee shop. And on top of that, we also know by the US Treasury has indicated that 10% of Americans are on bank, so 10% of Americans do have a bank account. Increasingly, for these people, there is no options. So, that also creates a huge, I believe, economic problem.

Mike Maharrey: Yeah, absolutely. Well, I’m not going to take up any more of your time, but before I let you go, I do want to give you the opportunity to let folks know where they can find you and where they can find the economic inclusion group if they want to get involved, if they want to learn more about this issue and maybe help out in some way, where can folks find you?

Jorge Jraissati: Thank you, Michael. Appreciate it. So they can find me, of course, in all social media. I’m particularly active on X on Twitter, so they can find me there. They can also send me an email at jorge@econinclusion.org, and they of course can go to our website as well, EconInclusion.com. And yes, if somebody wants to share their story of debunking, if somebody wants to help in any form of capacity to even raise awareness, to do research, to volunteer, and we’re very happy to incorporate you if somebody wants to donate. We are a 501-C3 in the United States. We believe that we are the only group working systematically to solve this debunking problem. So, if somebody wants to donate, please reach out as well to do tax donation, a tax deductible donation. Thank you, Michael. I appreciate it. Thank you for raising awareness about this.

Mike Maharrey: Yeah, absolutely. Thank you for the work that you’re doing because it’s so important. And as you say, it’s not something that comes up a lot. I’ve been aware of the banking issue from some of my other political activism, but I would venture to guess that a lot of folks listening hadn’t even given the subject any thought until today. So glad we can amplify your voice and get you out there and appreciate you taking a little bit of time out of your day, especially as we rush up to a holiday weekend when there’s a lot going on. So I really, really do appreciate it and appreciate the work that you’re doing. Very good work, and thank you for doing that.

Jorge Jraissati: Thank you, Michael. Thank you. And happy Thanksgiving for you and your family.

Mike Maharrey: Happy Thanksgiving to you. Thank you.