Fintech Recap: Charters, BaaS & the Fed

0:00 Hello and welcome back to the FinTech Takes podcast. It's June, which means that we have another episode of FinTech Recap with our friend Jason Mikula, publisher of Fintech Business Weekly. Jason and I had a lot to catch up on in this episode. We talked about the accelerating trend of fintech companies becoming banks and the impact that that might have on their valuations and the way investors feel about them. We made a return trip to Bass Island, if you can believe it. Uh, don't worry, we're not going to get stranded there, at least not yet. But we did make a brief return trip, which felt good. It felt a little bit like going back home. Uh, for me at least. Jason might have been experiencing some sort of trauma as we were doing that. But a lot of fun was had. And we also talk about some executive orders that have come out recently from the White House and what they mean for fintech, what they mean for the different regulatory agencies, what they mean for banks. And we end as we always do with some rants on some subjects that we can't let go. Uh I will give you an ear muffs warning if you're listening to this in the car with kids.

1:03 Uh you might want to turn it off before it gets to the can't let it go section because I do black out uh at the end uh on a subject that makes me quite angry. But uh nonetheless, it was fun. It was therapeutic. As always, a delight to have Jason on the podcast. Uh, without further ado, here's another episode of Fintech Recap.

1:38 >> Okay, Jason Mikula, how are you, sir? Uh, I have survived a 90° Fahrenheit day in the Netherlands, which for for me is about 30° above average. And [laughter] no, I don't have air conditioning. So, if there's video of this and I look sweaty, that's why. >> Uh, that's totally fair. That's totally fair. Uh, I have moved into a new office. So, um, you'll notice uh different uh decorations. Uh, I believe I have uh >> Yeah, where's my book?

2:08 >> It's right [laughter] there. It's right there on the shelf. banking as a service by Jason Mikula. You can all see it right there. Um you're right next to Kyla Scandlin. So um >> I know pretty big deal. Uh so very happy to be here. But I will say that similarly the building I'm in, I'm on the third floor, the windows don't open and they're like, "Yeah, there's a chance the air conditioning doesn't work." And it's like, "Oh, okay, great.

2:30 Fantastic." So um we have not quite gotten as hot as you're describing, but we will. And when that happens, I may be redfaced and sweating on some of these future podcasts. >> What What is like a a peak summer temperature in normal times? Like set aside the global warming like crazy spikes, [laughter] but like a normal Montana summer like growing up, what would be like a peak high? >> Yeah. I mean, it was I guess what I would say is it was notable when it got into the '9s was how I experienced it.

2:59 Notable. So notable. So like in in like August we would have like it'd be in the 80s you know um you'd get into the 90s occasionally but like into the hundreds was like very unusual and for the most part it still is. So I would say like our baseline is probably now closer to like upper 80s lower 90s uh as the high during the summer. Uh but still nothing to complain about. My younger brother, as a matter of fact, just moved from Montana to Phoenix. And so now I don't get to complain about hot weather because he's living in like a literal hellscape surrounded by scorpions and 120°ree weather. So, um, it's a different different sort of vibe.

3:37 >> Yeah. No, thank you. I don't need anything that's triple digits. I do not need in my life. Well, you're a Chicago guy, so like I imagine you grew up like more cold than hot, right? >> It's pretty extreme in both directions, to be honest. I mean, the >> [clears throat] >> you know, the just finished undergrad, living in your first adult apartment, but like you have no money, so there is no air conditioning because the building is like 100 years old.

4:04 >> Oh, yeah. >> Like you you regret that decision when Chicago summer rolls along because >> it's hot and then in the city it stays hot at night. >> Oh, I hate that. >> Um, so yeah, it you get extremes in both directions in Chicago. Yeah. The the thing I'll never trade now that I realize what I have is waking up when it is cold at night or it's cold in the morning. Even if it's going to get hot during the day again, like that is just a great way to reset my nervous system.

4:33 I can't give that up now that I have it. >> Oh, speaking of resetting resetting systems, should we uh should we dive into the latest changes, drama, enforcement actions uh of the fintech and banking world? Oh my gosh, there's so much to cover. So, um, allow me, if I can, to go first. Um, this is a story I know you've been paying attention to. I have been paying attention to. Um, it's been happening for a while, but I think it's crescendoed in a way that's kind of interesting right now. Everyone wants to be a bank. And um you know in particular what we are seeing is uh sort of another wave of what I would consider to be sort of your classic neo banks that are uh becoming banks or are on the path to becoming banks. Uh reminding me I guess of like the what late 2010s and early 2020s when we saw a wave of this happen in in neo bankanking world. Um, so the latest news is that uh, Chime uh, co-founder and CEO Chris Britt did an interview uh, where he teased the idea that uh, Chime will become a bank. And it's a question of when, not if, which if you've paid attention to the history of Chime, you will know that is very different than the way he used to talk about Chime uh when he would pitch it in the uh Helion days of 2020 and 2021 as a software company and not a bank. Uh my how times change. So uh it sounds like Chime will become a bank and we don't know exactly what the timing is, but that is something that they are planning for. And similarly, uh, Mercury, who we've talked about many times on this show, uh, has just received conditional approval on their national bank charter from the OC and timed that with a new fund raise of $200 million at a $5.2 billion valuation, which is an up round relative to their last uh, fundraising.

6:32 So Mike, the question I have about this sort of trend is what is the thinking driving this and in particular uh how might a move to become a bank impact these companies valuations? And just to put a little bit of detail around that second question, um I did a little bit of research on sort of neoank versus bank valuations. And if you look at Chime as one example, Chime went from having a 30x revenue multiple, so price per sales, uh, in 2021, which is very high. Uh, that was when he was saying we're a software company, not a bank. Of course, we're a software company. Uh, to about a 7x uh, revenue multiple when Chime went public last year to a 3x multiple today. So it's been compressed in a pretty significant way. Uh Mercury similarly has had its ups and downs over time. Its most recent revenue multiple uh after this latest fundraising round is 8x. And you know, I think it's an interesting uh sort of progression, if you will, because you go from being a privately held non-bank banking service provider to at some point going through two different gates. One is going from a private company to a public company. Uh obviously, Chime did that last year.

8:02 Mercury has not done that yet. And then the second gate that you go through is becoming a bank. Obviously Mercury has gone through that gate now uh while still being a private company. Chime it sounds like will at some point go through that gate. And when you go through both of those gates, my observation is your valuation and the multiple that you get on your sort of uh core revenue assets that gets compressed as you go through each one of these gates. And there are some lessons from the past that I think we can draw from.

8:32 Right? We saw this with SoFi. Um, SoFi over the years has had a much much higher uh revenue multiple, but when it went public and then when it became a bank, um, you saw those things start to compress. And today, uh, switching from like fintech valuation metrics to bank valuation metrics. Uh, banks are valued by something called price per tangible book value, which is um, I guess the shorthand way of saying it is tangible book value. What are we worth if we just sell everything tomorrow that isn't nailed down? Like all of our liquid assets, our loan book, uh, our real estate that's easy to liquidate.

9:13 Like, if we just get rid of everything, what are we worth? And then your multiple is anything beyond one uh, X that you're worth. Uh, meaning anything beyond what you're uh, can be liquidated for. SoFi currently is trading at a 2.2x uh price per tangible book and that is uh bad from a fintech lens, right? Like 2.2 uh not very good. That is like JP Morgan Chase level really good if you're a bank, which is kind of this strange sort of contradiction with SoFi. And then Lending Club is the other example obviously another sort of neo bank that uh acquired a bank, became a bank, had a bank charter and has gone public. um they are currently hovering around a 1.25 uh XP to TBV uh multiple and that is I guess you'd say good for a bank but in no way exceptional. So, I'm curious what your perspective on this is because it does seem as though the end journey of all of these companies is to become a bank and then to just sort of fight against gravity as much as you can to prevent your uh valuation from getting compressed by these uh very pessimistic bank analysts that just won't, you know, be chill about it.

10:31 So I think the first question is why are these companies pursuing a charter or perhaps more specifically why are they doing it now? >> Yeah. Uh and I think the you know the reasonably obvious answer to that question is because they can do it now right I mean you know we went through uh basically since the financial crisis of very very few denovo charters >> a bit more activity on the M&A side so you know you mentioned lending club which acquired radius >> y of course we've had some other SoFi acquired I think it was golden pacific uh column acquired chico state bank or something like that, I think was the name of the bank they acquired.

11:16 >> So, there was some more activity on the M&A side. >> The mentality, as I read it, seems to be now's the time when we can do it. >> Yep. >> And if we think we might want it, we should do it now. >> Sure. >> Um, I do think that it is worth pausing to ask the question, might some of these companies regret that decision? M now I haven't actually had the opportunity to speak with anyone in senior management at Vero because I understand that they don't like me very much. [laughter] >> I wonder why.

11:49 >> Uh I do wonder >> it's been fair. It's been fair coverage to be fair. >> Facts are are facts even even in 2026. Um I I do wonder if like that is an example where it was like hey we really thought like we legitimately and sincerely thought as we went through that process that getting this charter would to use golden speak be a creative to the business model and for various reasons whether that was uh you know choice of technology stack whether it was difficulty executing uh whether it was overly optimistic projections you know I would argue based on the data that we have that having the charter has not particularly been accreative to their business model. Now Chime is a different company larger uh positive net income per most recent quarterly earnings. So just in a very very different position you know can Chime leverage a bank charter successfully to enhance its business in a way that Vero didn't? I entirely think that is a possibility.

12:57 Again, it does involve actually being able to execute, which I think Chime has a a significantly better track record than than, you know, using Vero as a comp. Um, but that said, it's like we are seeing a flood of, you know, quote unquote traditional or full service charters, deposit taking charters, as well as all the national trust bank charters, which we should probably set aside for this conversation because I'm assuming I'm assuming like the math on valuing that is substantially different than the price to book ratio that that you know you mention or that we're discussing. I would be surprised if like Coinbase ends up getting valued based on price to tangible book value. Yeah.

13:37 >> Um yeah, it's like okay, the window's open. If I think I might want a charter, even if I don't really want it today, maybe I think I'm ready for it in four or five years. Like I don't know who's going to be president or who's going to be comp patroller or who's going to be the FDIC. You know, it the year is 2030. It's president AOC. [laughter] uh I don't know Roit Chopra is the comproll of the currency you know so it's kind of like okay now's the if you want it if you think you want it now's the time to do it and yeah that's what we're seeing >> so I think the next question is like what is the narrative that you can plausibly sell you know to quotequote Wall Street >> um and I also think uh and I think you mentioned this when you're talking about SoFi >> it is worth distinguishing between, you know, those those cranky analysts who are churning out the research reports.

14:32 >> Yeah. >> And the sort of, you know, retail investors or in the SoFi case, like the SoFi bros on Twitter. >> SoFi went public via spa. Like we have to remember that like they spacked, man, and they they carry over that spa enthusiasm even to this day. If you if you say mean things on Twitter and use the the uh the tag uh for SoFi, they will find you and they will make your life unpleasant.

14:58 >> Um it's like >> you look at and I don't mean to pick on these companies specifically. It's just the examples that come to mind. >> You know, Figure publicly traded. >> What is Figur's business fundamentally? It's primarily a heliloc lender, but it's not really valued the way that a traditional heliloc lender is valued. And Figure has done a good job, like props to their comms and PR and investor relations and marketing team of basically saying like, you know, we're a blockchain company, we're a technology company, we're probably now saying we're a tokenization company because that's cool, you know, the cool word to use.

15:39 Um, >> similarly, Upstart, like what is Upstart? Like Upstart is a non-bank lender. >> Uh, but they've done a very good job of constructing a narrative that like, no, no, no, we're we're actually an AI company. And so even though they're both, you know, they are both publicly traded, uh, neither of them are banks, but the point I'm making is like they have done a good job of intentionally constructing a narrative to separate themselves from what are arguably very fair market comps. And so I've been able to sustain valuations and valuation multiples that if they were compared like for like with a heliloc company or with a NBFI like a non-bank lender >> like say one main financial or something for you know that those multiples frankly are probably not super defensible.

16:32 >> Um and so I guess like my TLDDR here is like okay >> if you think you want the charter get it now. >> Some of these companies will regret it. And then as far as like the valuation story, I I've I always caveat neither of us are equity analysts. I [laughter] uh I am just routinely surprised and I guess I shouldn't be anymore at how powerful storytelling is in what is ostensibly like a ruthlessly competitive efficient market like the stock market.

17:06 >> Yeah. Um, with the wild card being I guess if you can attract a dedicated base of like retail fanboys and fan girls. >> Um, that can support a valuation that is untethered to reality. And not to go too far uh a field, but like Tesla is like a classic like extreme example of that where it's like, hey, like the fundamentals of this business are like, pardon my language, they're kind of shitty. >> Totally. But the stock price and the valuation are just untethered from the reality of what the business is because you have a very powerful storyteller in the form of Elon Musk who has attracted a following that that can sort of sustain that price.

17:49 >> Yeah. I mean I think that's right. You like use SoFi as an example, right? So they have the the spa energy that carries them forward to this day. And it is funny because you look at SoFi and it's like the core business is pretty strong, right? like it's a fairly big bank. They've done a pretty good job of uh you know getting a large base of um you know obviously lending customers converting them into kind of full bank customers uh trying to like increase the attach rate for additional products like it's a fairly strong consumer banking business but they also own Galileo and Technosis and I don't know if you saw they recently bought Peach which is a like a loan servicing platform and you know it's funny Because I just looking at the business, I would say, "Hey, maybe we should just like cut bait on all of this stuff." Kind of going back to Goldman Sachs, like maybe this Marcus idea is just a bad idea and let's just like cut bait on all of this. Like it's not going very well. Uh Galileo lost its biggest customer when Chime switched off of uh Galileo to using its own proprietary platform that it built itself.

18:59 um you know like I don't think the business really justifies making an acquisition and got buying Peach and like rounding out those capabilities but I do think there is an element of retail storytelling built into that where like part of the reason uh spack bros are very still excited about SoFi is this AWS of fintech story that they sort of spun up around Galileo and Technus and what they were doing there and to a degree you have to kind of feed that part of your investor even if the fundamentals of the business don't justify it. I also think SoFi just uh sort of released their own stable coin that now all SoFi users can uh buy and sell and hold. And it was funny because I read the press release and at no part of the press release was I like reading an explanation for why a SoFi member would want the stable coin, but they're like, "We have it." And you're like, "Okay, great." But what that really just suggests to me is they need the retail component of their investor base to be like, SoFi takes stable coins seriously. They're not going to get disrupted by crypto. They're the first bank to issue their own stable coin.

20:06 Blah blah blah blah blah. And so I do think there are a number of things that SoFi does that aren't really in the best interest of the business, but are and you know, I think Anthony Noto, who's the CEO, does a wonderful job sort of staying in touch with how retail investors are feeling about SoFi. and kind of throwing them a bone consistently so that they stay engaged. And I think that's a large part of why they are valued uh where they are relative to, you know, I always I always find the comparison between SoFi and Lending Club pretty fascinating because very similar businesses. Lending Club is a little smaller than SoFi's, but very very similar in a lot of respects. And I think in some ways you can make the argument that Lending Club is a betterun business. I'm not wild about the new branding for Happen Bank, but that's like a separate issue. Um but like it's interesting because as an example for a very long time uh lending club has reported their uh numbers using uh sort of reserve accounting right because that's what's required under Cecil and that's what all banks do and that's what bank analysts expect and SoFi by contrast does not they use fair value accounting where they mark tomarket their loans over time and they don't have to realize all the losses upfront and it's it's utterly perplexing to bank analysts, right? They look at SoFi and they're like, "Uh, this seems weird. How do we know how to value this company, but SoFi just does it and they've done it for so long and have gotten away with it for so long that Lending Club actually recently changed from reserve accounting to fair value accounting."

21:37 And so they are moving towards SoFi. And what that tells me is they're just tired of getting punished as a bank stock when like their business, I think from their perspective, is the same as SoFi's, but they're not getting that same premium. So there is this sort of inherent like irrational component to how all of this works. And I will say to to end this um I worry about Chime having their valuation multiple compressed even further because obviously they went from 30 down to seven now down to three. Um it's funny cuz like there's no reason why being a bank having a bank charter should make it go down any further. Like it really shouldn't go down any further, right? Having a bank charter at this point for someone like Chime just improves their unit economics. It just makes them more profitable. Like there's it's nothing but good for Chime. And yet I think the reason that you know Chris Brit is saying yeah at some point we'll become a bank but we haven't done it yet. But hey man, like the window's kind of closing. You never know like when charters aren't going to be available anymore. I think the reason they're kind of delaying a little bit is they know like those bank analysts are annoying and like unless you have some sofi like superpower to keep your your multiple high you're going to get compressed even more even though it doesn't really make sense.

22:53 I mean my last comment on that is uh there's also just like a fundamentally or there should be a fundamentally different lens uh that you view risk through when you're a bank versus a non-bank. Right? So part of what justifies those high multiples for tech companies is not just that you know oh it's tech. It tends to be that they are extremely fast growing and that's why investors are willing to essentially pay more because they believe it is going to grow and return in the future. When you're a bank, as you and I and Kia and Henriks and a bunch of other people have discussed, adnauseium, really rapid growth, it it at least in my opinion is inherently a sign of risk, whether it's on the you know, both on the deposit side and on the asset side, particularly if the asset side is is doing your own lending as opposed to deploying um those deposits into other assets, buying securities, parking them at the Fed, whatever. And so, you know, you can see a world where it's like, okay, if the pressure is reward shareholders by trying to maintain a higher multiple, I need to keep growing really fast. Uh, oh, but now I'm a bank, but how am I going to do that? you know, take on a bunch of accounts and deposits that like maybe otherwise I wouldn't really want to, you know, andor, you know, deploy funds uh more quickly or into assets with higher yield.

24:28 >> Yeah. That maybe otherwise you wouldn't. And not that to be clear, not that Chime is SVB, but that is a kind of decision-m where it's like, okay, we're reaching for yield and you know, all of the incentive structure, whether it was the executives somehow I've hijacked this and turned it into SVB, I apologize, [laughter] whether whether it's like the executives bonus or the share price incentivized them to do that. And you know, the end result was it you know, it blew up the bank and wiped out all equity holders. So I do think like banks are a very special kind of business. Um and it it it it's not irrational to look at them and value them potentially using different metrics or different kind of multiples. And it will be interesting to see how some of these companies and Chime explicitly explicitly described itself as a tech company how they try to navigate or thread that needle of well we want the charter but we don't want to be treated we don't want to be valued like a bank like it it will be interesting to watch how they try to do that. Yeah, I think that's exactly right. And you know, it's just a timing in your life thing, too, right? Like this is my high growth phase. I probably shouldn't be a bank because it's not really compatible with the way that they think. This is my middleage slowing down a little bit phase. Maybe a bank charter is a better thing. But again, the challenge is the window for getting a bank charter is not always open. And so you have to time when is it right for me with when will regulators allow me to have this thing. And those two things don't always match up as we've seen. Um, Jason, I am delighted to get to say this. Delighted. I I I'm so thrilled.

26:08 Can we go back to Bass Island? >> Uh, I can't tell if you're being sincere or [laughter] sarcastic. So, I'm just >> I I am I am being sincere only because I know that this will actually be a three-hour tour and we won't get marooned on Bass Island and have to make a coconut phone. So, uh, please take us back for a brief tour. >> Brief tour. Brief tour. So, Synapse and Evolve Trash Fire still smoldering. This segment is not about that thankfully.

26:35 >> Thank God. >> I really thought we had left Bass Island behind us. Um, [laughter] but as uh as our friend and industry colleague Kia Hassllett recently discussed in her FinTech Takes Banking newsletter, we've seen a pretty significant slowdown in enforcement actions from the federal bank regulators. And that really shouldn't come as a surprise, right? It was expected that whoever Trump appointed uh to the relevant regulators, so controller Gould at OC, uh Travis Hill at FDIC, and more recently Kevin Worsh at at the Fed, although the Fed is like a little bit of an outlier uh for reasons that should be obvious to listeners. um it was it was clear that the priority was going to be a deregulatory one and we've certainly seen that on the rulemaking side. We've also seen it on the enforcement side.

27:30 So, you know, a lot of what we've seen uh you know, I I I'm signed up for the OC press release emails and there were far far far more terminations of consent orders than there were you know, new enforcement actions, new orders. So, I'll admit I was a bit surprised when uh I saw the monthly OC enforcement action press release in my inbox and it included a consent order with Community Federal Savings Bank uh more commonly known as CFSB.

28:03 >> Um for those that are not familiar uh with sort of like the actual business of the bank, uh I I find this kind of hilarious because I I actually know where this is. CFSB is a single branch bank located underneath the elevated train tracks. So it feels you can't call it a subway because it's above ground in New York. So it's like the elevated train tracks. >> Uh across from a beauty salon and a liquor store in the Wood Haven neighborhood of Queens uh in New York.

28:31 >> That is highly specific. Michaela, >> yeah it hey uh you're a storyteller. You're a storyteller. You got to be nothing. I'm nothing if not detail oriented. Um [laughter] uh but in addition to its I guess like legacy business or historic business of being what's essentially I mean literally the word community is >> in the name of the bank uh it also has become a very significant player in the partner banking space including quite a number of what I would consider higher risk programs like those that are focused on crossborder uh and those that serve consumers and businesses outside of the United States.

29:09 So, I mean there's, you know, more than a dozen programs, but some of the higher profile ones include Airwall, uh, Wise, formerly known as Transfer Wise, Payaneer, uh, Chipper, which is a African sort of neo/ um, P2P type service, Nomad, which dedicated listeners will remember was on Synapse at one point, a Brazilian >> uh, Brazilian banking startup. Those programs powered a very rapid growth in CFSB's deposits and assets. So at the end of 2017, the bank had less than 140 million in assets. Uh and that grew to 900 million or about 900 million at the end of 2024.

29:58 Although the bank's assets did shrink slightly in 2025, which I'm guessing was like a sign that there was enforcement activity brewing behind the scenes. >> Um, I actually flag these risks in a story I published almost two years ago. Uh, so maybe I'm I'm doing some uh programming notes for the OC. Um but but this is all to say basically you know the risks seem to have finally caught up with CFSB given that the consent order focuses squarely though narrowly on BSA AML issues. Uh so very quickly uh for folks who want to like read all the details like I would recommend either my newsletter on this topic or just go read the actual consent order on the OCC's website. Um, but the TLDDR is basically CFSB grew its payment processing business line far faster than its BSA and AML controls for this business line.

30:56 Uh, to quote the consent order, this resulted in systemic internal controls breakdowns, weak independent testing, and weak BSA staffing. End quote. some of the deficiencies that were spelled out in the consent order. I mean, I can tell I'm a real nerd because like I've read enough of these that it's like, "Oh, wow. That's weird." Um, some of the the deficiencies included a transaction monitoring system with flawed data, logic, and methodology that resulted in quote a very high percentage uh, end quote of transaction monitoring alerts that were just automatically closed with no investigation, which seems like a problem.

31:37 >> Yeah. Yeah. Uh, also CFSB failed to determine whether it had correspondent accounts for foreign financial institutions. Like that is technical speak for CFSB did not know if some of the accounts it had were for foreign banks and those >> alarming. Yeah, those uh are much higher risk because those accounts can be used to facilitate wire transfers and international payments for that foreign bank's customers. So, if you're engaged in correspondent banking, like you kind of want to know what you are engaged in it, that you [laughter] are engaged in that business so that you can monitor those accounts for signs of suspicious activity. M >> um the consent order basically calls for a comprehensive endto-end review assessment of BSML program and basically like remediate these problems.

32:31 I do think it's notable what is not in this consent order specifically anything else other than these BSA AML topics. So during our wave of BASS enforcement actions in 2022 to say 2025, um BSAML was a very common theme. Uh but it was far from the only topic area covered in the approximately 20ish consent orders that uh were entered into during that time. you often saw adjacent areas, specifically board governance and my personal favorite, TPRM, third party risk management, [snorts] >> cited alongside those BSA AML concerns.

33:15 And a fair number of those consent orders also included business restrictions. Uh so for example, if you want to on board a new program, you need to get supervisory non-objection before you do so. This consent order had none of that. It was just BSA AML stuff. So, Alex, my question to you, and I'll admit this call calls for speculation. Uh, why do why do we think the O [snorts] why do we think the OC felt the need to act in this case despite the general change in regulatory and enforcement posture?

33:52 Well, I think the obvious answer, which you already kind of uh hinted at, is that um CFSB is a tire fire. [laughter] They couldn't ignore it. I mean, seems like the most reasonable answer, right? >> I didn't I didn't even mention the various um uh pig butchering schemes linked to a couple of these companies or pioneers. Uh I think it was like a huge OFAC issue that they had. >> Yeah. So, I mean, it it does seem like Tiny Little Bank courted a very high-risk category of customers uh in an attempt to grow very very fast and to generate profit, which it it did, which is, you know, good for them. Um, but I mean like the the the colorful example you gave from the consent order about um like they didn't know that they were doing correspondent banking, but they were like that [laughter] that's that's the kind of thing where like oh you don't even know the scope of the risks that are like in your way that you're facing. Like it's not even you're not even aware of how much danger you're in.

34:55 Um, I think that level of mismanagement would be probably what required uh the the OC to act. I will also say in my experience watching kind of regulation and deregulation it kind of cycle back and forth. There's always like countercyclical examples that are sort of chosen to illustrate like we're also pro like if you're if you're highly regulating and giving all these consent orders, you also want to give a signal that like no, we're open to innovation.

35:25 We're not the bad guys. And if you are deregulating everything, you send the opposite message, which is mostly we deregulate, but look, we're still, you know, uh doing our job and making sure that we flag these things. So you see that uh right now actually in prediction market land with the CFTC making a big deal about like the four insider trading cases that they've busted. Like look, we're cracking down on this. It's like okay, probably not. But you want to send that message and make that clear. So I think it it serves that uh goal as well.

35:53 I think the thing I'm most surprised by is the thing you were saying about the the narrowness of the order, right? And I'll just pick on uh restrictions on programs. You have a super deficient BSA AML program. You don't even know if you're in correspondent banking. Clearly, your transaction monitoring system does not work, but you are not in any way restricted from bringing on new programs. Like, that's weird, right? That's strange. Um, it makes sense to me even if you don't want to flag other areas like board governance or TPRM, and I'm not terribly surprised that those areas weren't included in this because I do get the sense from the current regulatory leadership that they felt prior versions of the agencies were too expansive in the way that they would like whack banks like reputation, risk, TPRM, like all these other areas. And so I think they are trying to be much more tailored in their um enforcement and supervision. Uh and this I think is an example of that. But in this particular case it feels too narrow because a like you do have a TPRM problem if you have all these counterparties that you're working with and you don't even really know what they're doing. That is in addition to BSA AML that is a third party risk management problem. And also uh like no restrictions on bringing on additional programs. You don't have to get a non-objection. Like that's kind of crazy. And so I I feel like this is probably a little bit more performative, picking on a really egregiously bad example, than it is an indicator of no, we're still trying to hold a line here and stop this from happening. This ties into our next story, which we'll get to in a second. But I do just generally get the sense that uh the direction from the top right now is, hey, we want banks to take risks. We want them to innovate. We want them to partner with fintech companies. So, this is designed to not get in the way of any of those larger goals.

37:49 >> That is a great point that I will admit did not occur to me as I was uh writing the newsletter or preparing preparing our notes for today that like oh this is like a nice piece of window dressing that you know if somebody gets hauled before the Senate Banking Committee and asked questions they can say no no no look we're still we're still doing financial crimes compliance enforcement. Like look at this example. >> Like Senator Warren, I don't know what you're talking about because we do blah blah blah. Right. Yeah.

38:17 >> Yeah. The bank with the uh the hand sanitizer moneyaundering problem. We uh we got a consent order for them. [laughter] >> Right. Right. >> Um no, that is a good point. I mean it it I'm at least somewhat sympathetic to the positions expressed by the regulators of like, hey, maybe the pendulum swung too far and we should refocus on material financial risks and not process risks.

38:49 Did you check all the check boxes like >> Well, and you remember the you remember the uh Blueridge one? That was the famous one for me where it was like two consent orders within like whatever it was 18 months. >> It was within 18 months for sure. Yeah. >> Yeah. And like that was I mean even like I I tend to be fairly sympathetic to like we should be careful in banking as a service obviously for reasons that we've discussed uh at Nauseium on this show. But even that I was like whoa boy that is that is excessive. So I I get where you're coming from. Yeah. Um, but then it's also a matter of like, okay, what that's what you're saying. What what are you doing or not doing behind the scenes as far as a supervisory practice? And what signal is that sending to the banks that you regulate?

39:37 And what I get worried about, and this will not be a surprise to anyone who knows me or follows my work, is like, are we flashing a green light for crime? because sometimes it really does feel that way. >> And my uh my unsolicited advice to anyone in the space would be like remember regulation is backward-looking and there will be other people at OC, at the FDIC, at Fininsen in the future looking back at what is happening now.

40:07 >> Oh yeah. uh and there are still you know state regulators um and state AGS depending on exactly you know what the situation is and so I do understand the impulse that it's like hey the current climate is all systems go risk on >> uh but we we've seen this story before right and it was not a it was not a happy ending for at least some of the banks that decided to go risk on in you know in that sort of first wave of of bass stuff in 2020 20 plus or minus. So, should we get off Bass Island? Should we go somewhere else?

40:40 >> Let's That was 3 hours. Let's get the hell out of here. Uh, turn the ship around. Okay. Um, I will, uh, take us by a, uh, different island that is maybe somewhat related, uh, which is, um, sort of, uh, uh, deregulation focused. Um, there were two interesting executive orders uh from President Trump that were signed recently that I wanted to run through because I think they speak to exactly that point about the kind of regulatory environment that we're in right now. So, uh, I will give you the highlights of each. Uh, I will give you the full actual real names of the orders which are always like so like fluffily named that doesn't really tell you anything. But the first one is uh integrating financial technology innovation into regulatory frameworks.

41:30 This executive order does a couple of things. First, uh it gives federal financial regulators, so the ones we've been talking about, 90 days to review existing guidelines, guidance, and application processes to eliminate overly fragmented or burdensome rules that shield incumbent mega banks. Interesting. Uh two, it directs those same agencies to lower friction and establish smoother pathways for collaboration between traditional banks and independent fintech platforms. So make Bass great again, Jason. Um and then finally uh it requests and the word request is very important because the uh administration despite its desires can't tell the Federal Reserve what to do.

42:16 requests the Federal Reserve Board evaluate granting fintech and digital asset firms access to uh central reserve bank payment services and master accounts. uh and it specifically uh goes out of its way to ask the board if there's anything they can do to rein in the actions of the independent reserve banks individually who've been making a wild number of interesting decisions as it relates to master accounts and access to payments infrastructure. So that is the first uh executive order. Let's pause on that one before getting to the second one. Um Jason, I know you read this one. Obviously, it relates to areas that are very core to what you cover.

43:00 What were your takeaways from, again, to be clear, an executive order that doesn't necessarily have a tremendous amount of teeth, certainly isn't a law, but is directing uh agencies and asking for things uh in this sort of fintech innovation realm. So, I do not actually want to go down this route, but I will point out that this executive order like potentially has a direct impact on companies that Trump and his family control, which just feels >> we would be remiss if we didn't mention.

43:31 Yeah. >> Feels a little conflict of interesty to me to the extent that's still a thing. Um [snorts] and as you alluded to in the nature of the EO, right, the the agencies that would >> um fall under this executive order, so the CFPB, the SEC, uh the NCUA, so the uh credit union uh administrator, the CFTC, FDIC and OC and Fed are all at least theoretically independent agencies. Um, I also think it's worth pointing out the NCUA, and I have to give credit to Matt Janaga because I read this in his post over at Modern Treasury. Uh, I will put that in my show notes. Um, the NCUA doesn't even have enough directors to pass rulem. So like in like the e the EO is essentially like a sternly worded letter and it's a sternly worded letter saying hey regulatory agencies like this is the direction I want you to go >> and then it's up to this alphabet soup of financial regulators to then promulgate potentially promulgate rules >> uh to try to implement or further that agenda.

44:48 Um, >> as you pointed out, the Fed is still ostensibly really is independent. >> Um, the rest of those alphabet soup agencies are, you know, direct directly or indirectly, you know, controlled by Trump appointees um that generally have been amendable to advancing the policy goals of of the administration. Um, I will say that I'm interested to see both the speed and there's no other way to put this, the competence with which these agencies pursue any action based on what's in this executive order. So, for example, like the OC, at least in my mind, and please feel free to push back or if you think differently, I'd love to hear. Um, and in my mind, the OC and comproller Gould have been sort of the most forceful invisible in pushing both the sort of like the deregulatory/proinnovation agenda. Um, and that's shown up in in, you know, his public remarks in, you know, hanging out and doing photo ops with the founders of Arabore.

46:02 >> Yeah. um vote at CFPB at least based on >> he's got his own project he's working on. >> He definitely has his own agenda. It's not necessarily clear to me that his agenda is like innovation so much as taking >> I don't think he cares about innovation to be totally honest. Yeah. >> Yeah. So much as taking a weed whacker to the entire government. >> Right. Right. Right. >> Which I guess like by extension a deregulatory agenda I suppose. could foster innovation, but that doesn't seem to be what what his that's not why he wakes up in the morning. You know, it's not what I recall from some of the remarks he made. What gets him up in the morning is trying to make government employees like cry and be terrorized.

46:48 [laughter] >> I'm paraphrasing. >> No, I think that's not that far off. Yeah. >> Destroying all woke ideology, I think, is what motivates them. Yeah. Um, Travis Hill, chairman of FDIC, seems to have maintained like a relatively lower profile and it he was a board member at FDIC under the prior administration. So yeah, >> he may be more of like a institutionalist and or >> you know has enough long-term thinking to wonder what is my career after this administration and how do I sort of navigate the current climate so that >> I'm still employable potentially in government whoever comes next.

47:32 >> Yeah. Yeah. >> Uh and then the Fed, you know, Worsh uh has been sworn in as chair now. Uh, but as you mentioned, we have 12 independent, quasi independent regional Fed banks, which I'd actually love to hear you unpack the timeline you laid out in your newsletter a little bit more because some of that was news to me uh as far as like some of these decisions about master accounts actually happening at they're happening at the regional Fed level. And so you could have like a very different read at whatever the Richmond Fed versus the Chicago or Atlanta or the Minneapolis Fed, which does seem kind of problematic to me. Like it feels like you would want that to be consistent regardless of which regional Fed is processing an application.

48:23 >> Yeah. Well, let me let me run through the timeline because it is kind of wild. So, um I I did a little research into sort of history of master account access and obviously it goes back even further than this, but the modern history uh you could start in 2017 and that was when the Kansas City Fed, who will feature prominently in this timeline, uh denied a master account application from Reserve Trust, which was a Colorado chartered non-depository trust company.

48:53 Um then in 2018 uh the uh Kansas City Fed reverses course grants reserve trust a master account. 2020 uh custodia bank who's come up a time or two on this podcast. A Wyoming uh special purpose depository institution uh files for a master account application again with the Kansas City Fed. Kansas City just gets all the fun stuff. Um, in 2022, it is reported, it is alleged that former Fed Governor Sarah Bloom Rascin helped Reserve Trust get its master account while serving on the company's board.

49:31 This is actually something of a pattern with people who used to work at the Fed, lobbying the Fed for master accounts for companies they're on the board of. Uh shortly thereafter, the Kansas City Fed revoked Reserve Trust Master Account after determining that the company is quote no longer eligible uh for reasons that are a little unclear. Also in 2022, the Federal Reserve Board in an attempt to try to get a little bit of control over this process adopted guidelines for reviewing master account applications which defined three different tiers for applicants depending on whether they are federally regulated, whether they are state regulated, if they are uh uninsured or insured. And essentially the types of applications we're talking about coming from these like Wyoming or Colorado state chartered non-depository institutions, those are tier three, meaning the highest risk and the ones that require the most evaluation. Uh 2023, the Kansas City Fed denies officially custodia's master account application after just letting it linger for many, many years. Custodia sues over the decision and loses and loses on appeal and loses on appeal again. Uh, and the losses for those appeals basically stem from the fact that the courts recognized according to the law, the Fed can do whatever it wants here.

50:48 It doesn't have to answer to anybody else or even have a very transparent or understandable process. Fast forward to 2025. Fed Governor Waller uh who's one of those sort of innovation forward uh public officials publicly floats the idea of a skinny master account which would give more limited uh powers uh for non high-risk depository institutions. So you know um the types that we're talking about who fit into that tier three category. December of 2025, the Fed Reserve Board publishes an RFI to ask for feedback from the industry on this skinny master account idea.

51:26 March of this year, the Kansas City Fed grants Kraken, which is a different Wyoming special purpose depository institution, obviously a cryptooriented company, a master account. The account is described as being limited or restricted in several ways that are functionally similar to this proposed skinny master account idea. Later, uh, Vice Chair for Supervision Michelle Bowman clarifies that the approval is a one-year pilot. Uh, and Representative Maxine Waters asks the Kansas City Fed to explain what it's doing granting a skinny charter or a skinny uh master account, excuse me, before the Fed Reserve Board had actually figured out what a skinny master account actually is. Uh which brings us to the current month in which uh President Trump obviously signs this executive order among other things kind of asking the Fed to figure its [ __ ] out and uh the Federal Reserve Board publishing a formal proposal for a skinny master account and in that same proposal [laughter] encouraging the individual reserve banks to pause evaluating all tier three applications until they can finalize this proposed new account type. Uh, and you'll notice throughout many many many of those descriptions of that timeline, uh, the words request, the words, uh, you know, lawsuit denied, uh, appeal denied. Basically, what that tells us is, uh, the reserve banks can do whatever they want here. Not even the Federal Reserve Board, which ostensibly is sort of the body in charge of regulating the Federal Reserve system, can stop the reserve banks. And uh that has led to the mess that we find ourselves in. [snorts] >> So I know that this is not the specific topic that we're talking about, but it's adjacent, so indulge me. Yeah.

53:22 >> Um, the lack of accountability from the Fed here, like accountability to like like the public, the political process as well as the the entities that are applying for these master accounts, I I actually find like really quite troubling. >> Yeah. And I'll admit like this is not something I spent frankly any time thinking about until Yes. uh my foil lawsuit related to Synapse and then this master account topic and it's like okay >> I fully understand and 100% agree that monetary policy should and needs to be independent and insulated from political pressure. There are plenty of historical examples, Turkey under Erdogan, Argentina under forever of what happens when you do not have independent uh monetary policym.

54:16 That said, there's a bunch of other stuff the Fed does that apparently there's just like no accountability for. And I I just that seems this is cliche and probably like uh controversial at this point, but like that just seems unamerican. It's like you have this like an entity that I do understand the regional Fed Reserve banks are technically owned by their members. And so it is a it is a very strange like kind of government but also kind of not government structure.

54:53 They're like private, public, quasi, hybrid, weird companies. But yeah, they're very strange in the way they're organized. >> But if I were if I were custodia and and you look at that and I I should really go and read all the lawsuit filings the next time I'm on vacation for fun. >> Uh [laughter] or sorry, the next time I'm on a long flight, I'll I'll bring I'll print those out and bring them along. Um, but if if I were one of those entities that was applying for a master account and either being denied or being denied without or just being sort of strung along without explanation, it's like, okay, well, >> who are the member banks that own the Fed? Oh, like incumbent banks, are they keeping me out because they think this is a bonafideed risk to the financial system or they keeping me out because they want to preserve the privilege of being inside this regulatory barrier >> and and I don't want to go like too tinfoil hatworld because there if you spend time on Twitter in this topic area, there's a lot of tinfoil hat world.

55:58 >> Um, but I do think that's a fair question. it I think it's a fair question to ask >> and with the nature of the current structure like the Fed and the 12 Fed regional banks are largely have been largely insulated from having to explain or provide any accountability and you know I I do find that you know troubling. Yeah, I feel the same. I mean, I I think that what it ultimately comes down to is a lot of times for reasons that are just pure sort of historical accidents, we end up with these institutions that are not really optimally designed, right?

56:37 And I think the Fed is a good example where it's like >> dual state federal banking. >> Oh god. Yeah. I mean, CSBs is going to come after us. >> I know. I know. Yeah. They're not going to be happy. I mean, but yeah, like the the dual banking system is stupid and badly designed. The Federal Reserve, I think we can pretty confidently say, is stupid and badly designed. Like it has three different jobs that it does in combination, right? One is it operates a payment system uh which is really important in every sort of country with like a modern financial system has some public infrastructure that's used to like facilitate payments because it's important for economic activity. And you and I have talked to folks who work in that part of the Fed and like they just think about how do I run a good payments business, right? Like my job is to just make sure all the rails work and make sure the the transactions all clear >> including physical cash in >> physical cash checks like you know we we had uh Mark Gold from the Federal Reserve on the podcast a while back and he was like our job is to be there when the last check gets written and it needs to get like processed like we will be doing that until the heat death of the universe. Um and so I think that like that's one really important job. second job, which I'm not really sure why the Fed has this job to be totally honest, is as a uh like credential regulator of >> they should not they should not be a regulator. They should not >> It doesn't make sense, right? Like like the OC can do it for nationals, the FDIC can do it for uh state ones that are insured. Like we don't need this. So I don't really understand why the Fed does that. you have tried to get information from that part of the Fed about why they do what they do relating to Evolve or other ones that fall under their jurisdiction and you don't get clear answers. So like they probably just shouldn't have that job. And then there's the monetary policy part which is like really important, desperately need independence from the executive branch. So like to me we should be splitting up these jobs and like have different agencies doing them. It's kind of absurd. And I will also going back to an earlier thing you mentioned about the agencies all being kind of independent but led by political appointees. Um I think the other thing you're going to see you didn't mention um Jonathan Mccernan at Treasury, but I think that he might be the one who actually really tries to implement whatever comes out of this uh executive order as it relates to what the OC and the FDI and others do.

59:02 I've noticed, and I think you've probably noticed the same, Treasuryy's played a much more active role in sort of trying to steer what all the different agencies are doing, much more so I think, than previous uh administrations. And so, in some ways, I kind of read this as a coordinating document for what Treasury is going to do. And it's going to sort of roll down to a degree to get to uh the OC, the FDIC, NCUA, and others. So, we'll see what happens. Um, briefly I will just mention the other uh executive order that got signed at the same time is one called Restoring Integrity to America's Financial System. Whatever we mean when we say that. Um, this was sort of the uh watered down version of a thing that had been reported on earlier about potentially the administration making a change to require banks to collect citizenship information from their customers. Um, this executive order is the watered down version of it, seemingly in response to heavy lobbying from the banking industry saying like you cannot require us to collect verified citizenship information from every customer. Like we can't, that's insane. Um, I mean a again using the word unamerican like probably not really American, but also um like just operationally like this is insane. We can't do this. Um, instead it instructs banks to evaluate whether an account holder has legal residency status when calculating that customer's financial, credit, and AML risk profile. Um, it specifically orders agencies to reassess and flag risks associated with customers using foreign consular ID cards or nonwork authorized profiles to open up accounts and secure credit. and it requires the Department of Treasury to release updated red flag guidance within 60 days, propose adjustments to BSA within 90 days, and introduce a joint overhaul to the customer identification program within 180 days. So we may still see some changes uh come out in rulem and in guidance but it seems like they are stopping short of what they had initially been proposing which uh the entire banking uh lobby I think quietly threw their body in front of.

61:17 [snorts] >> Yeah. I did also read this executive order. Uh I interpret it I interpret it basically exactly as you are right like the regardless of the partisan politics of the specific topic just like logistically implementing this would be a nightmare not just for uh immigrants documented or undocumented but for everybody totally >> I will I will trot out my favorite alarming stat which is only 50% of Americans have a passport and that's that is a record high I mean that's much higher than it was even 10 or 20 years ago.

61:53 >> Yeah. >> And so it's like what you're going to ask every random person to bring in their birth certificate and then build I mean hey I got a great fintech infrastructure play verify like processing birth certificates to verify citizenship. Um it just >> there probably were some like IDV vendors who were like licking their chops at this but >> not somebody's cooking up a pitch deck or uh um I mean just utterly I think anyone who works in the space and has any knowledge of how account opening processes or IDV identity verification works saw this and was like yeah this is like entirely unworkable >> with the infrastructure that exists in the United States today.

62:38 >> Yeah. Um, I don't want to know what sort of like creepy dystopian palunteer future we're headed for, but like [laughter] to to require like to require an FI to verify citizenship status at onboarding is just the US is not equipped to to require banks or other FIS to do that. Yeah, I think that's right. And I I think that ultimately uh that sort of operational reality won out which um Hey man, if you're looking for little wins, things you can be optimistic about, I guess there's one for you. Um speaking of which, Jason, anything you can't let go of before I let you go?

63:14 >> Uh yeah, so I was debating what I wanted to talk about. Um I actually I have a question. Alex, are you excited for the Space X IPO? [laughter] Uh yeah, I I feel as if I have not gotten access to the wealth building opportunities that I need by being excluded from private markets in this way. So I can't I could not be more excited. >> Okay. But so you would voluntarily choose to buy SpaceX stock once once it begins trading and you're able to.

63:47 >> Yeah. I mean, I don't know anything about it, but Elon is doing it, and he tells me we're going to build like an interplanetary species, but there's also like data centers orbiting the Earth and space. I'm not totally clear on it. I don't know. I don't know what the details are, but I I I trust in Elon. >> Yeah. >> Well, even if you didn't want to buy it, you're probably going to end up with it.

64:07 >> Oh, good. >> Um, it I don't know if you've caught any of this uh uh sort of controversy. I mean very very specific but I actually find it very interesting >> um that because of a change in >> uh listing and indexing requirements uh specifically the NASDAQ 100 index methodology. Uh SpaceX could become part of that index within 15 trading days of going public. Why does that matter, you might ask?

64:44 Many Americans, probably most Americans actually, uh, who hold stocks do so through ETFs. ETFs, you know, the popular ETFs often, uh, are designed to track an index. So, S&P 500 or NASDAQ 100, what have you. Um the end result being retail investors uh are likely to end up holding SpaceX stock through ETFs without essentially without any say in the matter. Right? If if and when SpaceX is added to various indices >> uh so not just NASDAQ but if it joins you know the S&P 500 index or what have you.

65:31 >> Sure. >> It's it's going to be in your portfolio. It's going to be in my portfolio. it's going to be in everybody's portfolio who holds ETFs that track those benchmark indices. M >> um and I mean there's like a longer discussion about hey like there are some pretty crazy governance problems in that I think Elon Musk holds like 86% of the voting stock >> and so like is it really appropriate to be essentially forcing this investment on people >> when the governance of the company >> potentially uh is very bad. Um I think the the cynical take that is uh floating around Twitter which frankly I don't disagree with is that this is basically retail as exit liquidity.

66:18 >> So you have a bunch of early investors in SpaceX that >> they're they want to cash out at that whatever two trillion one and a half trillion valuation. But in order for >> a netty number by the way. >> Oh yeah. It's just like a petty number. >> If you look at analysts who've done a discount cash flow analysis, they put a reasonable valuation at like 150 billion, >> right? >> Not not 1.5 trillion. Yeah.

66:45 >> Um >> but if you're a early investor that wants to cash out at that luxurious 1.5 trillion valuation, >> you need somebody to buy those shares. >> Yes. And at the at the end of the day, like this gambit with the NASDAQ index, it what it's facilitating is, you know, your ETF, my my ETF, whoever has 401k uh invested in ETFs as exit liquidity for investors in SpaceX.

67:17 And I don't know. I guess I'm channeling my inner Susan Collins cuz I just call everything troublesome and like I'm worried [laughter] about everything, but it's like >> when are you going to vote against it, Jason? Godamn it. [laughter] >> I I don't I don't get a vote. Apparently corporations get to vote in Delaware. Now that's a topic for a different day. >> Um so yes, that is what I cannot let go of. SpaceX uh dumping on retail investors as exit liquidity for their VCs. Well, when I saw your notes on that, I assumed you meant people buying it like explicitly, which would be bad enough, but like yeah, if it's built into my ETFs, like that's a whole other level of problem. It does also remind me of like the just general alarm or concern that >> so much of like the stock market's value hinges on like three companies and like two people or whatever. like it's it it is another example of just how imshed with a very small number of companies and people the global you know economy is which is is concerning on a whole other level. Um, my can't let it go is one that I think we've at least texted about, if not talked about, uh, which is PayPal's settlement with the Department of Justice over a, let me see if I can get this right, a fair lending investigation regarding an investment program. So, this was a uh program to invest in black and minorityowned businesses that PayPal announced and launched uh in 2020 kind of right in the wake of the George George Floyd uh protests. And the program, just to be totally clear, was not in any way connected to loans. There were no loans.

69:01 No one was loaning any money. Payel didn't make any loans. And yet the Department of Justice investigated them for violating fair lending laws. And as a part of the settlement that PayPal has agreed to, not only are they going to be giving away uh sort of discounted payment processing for different categories of business, which while not explicitly coded to any one demographic group, are overwhelmingly going to go to white men. But in addition to that, PayPal has also agreed to stand up an internal program where, among other things, they will train their employees on fair lending laws so that they don't violate them in the future, even though they didn't violate them in the past.

69:47 This is one of those ones, Jason, where like I'm just never going to let this go. Like it is going to haunt me forever that PayPal agreed to settle an investigation into violating fair lending laws when they didn't lend loan any money. Like I I'm just going to lose my [ __ ] about this forever. >> Yeah. Uh, I I think we both wrote about that in our respective newsletters. And I remember seeing like the headline and then like actually reading [laughter] >> the DOJ press release and then like googling back to the original PayPal announcement of the program and I think it was like 2021 >> and then like being like >> am I >> stupid? Like I don't I don't see any loans here and I'm pretty sure that ECOA regg apply to credit >> because credit is in the name equal credit opportunity opt.

70:42 >> Yes. What what what fair what [laughter] how why this is bizarre. It's I mean I I know we don't live in this world. I know we don't. But I wish that the new CEO of PayPal, who had nothing to do with this program, and the program had already ended, so it's not even happening now. And again, has nothing to do with lending. I wish the CEO had just gone to the Department of Justice and went, you know what, this wasn't against the law then, it's not against the law now. It's certainly not against the Equal Credit Opportunity Act, which again regulates the granting of credit. Go [ __ ] yourself. Like, that would have been lovely if they had done that. Uh, and maybe in an alternate universe somewhere that's what happened, but it didn't happen in this universe. And man, that's disappointing.

71:29 >> Yeah, that was uh that was a pretty disheartening one to read. >> Yeah, it wasn't wasn't wild about that. So, I'll probably talk about this forever on the podcast from now on. So, just as a heads up, I'll I'll just be constantly referencing this because I'll never be able to let it go. Uh, Jason, thank you for letting me get that off my chest. That was very therapeutic. Uh, as always, a delight, sir. Enjoy the summer. enjoy.

71:49 >> I will >> like I'm sure very cool temperatures and like you you won't need air conditioning. You'll be fine. >> It it is going to be a great summer. >> Okay. I love it. I'll talk to you soon.