Monday links - Feb 10
On debanking, Rodney Hood's appointment, Fed politics, Marxist errors, and why we should tune out a bit more.
What a weekend, Go Birds! There was an awful lot of hooting and hollering from the Conti-Brown couch over perhaps the best roast I have ever eaten (courtesy of my successful hunt in December, thank you to that magnificent elk, and my Sous Vide wand, which I wield like a burly Harry Potter) and what I am sure are the best Rice Krispy treats (courtesy of my wife’s years-long refinement of a recipe; key is to brown the butter.)
Except, let us agree, for those fleshy cowboy heads. One reason we need diversity in the workplace is that someone, somewhere should have raised their hand and said “Hey everyone, different thought, these commercials are horrific and do not belong on the Super Bowl or indeed anywhere, let’s burn the originals and never speak of this again.”
But maybe that’s the Oklahoman in me talking. Here’s what I have been reading and thinking about.
Old Glory Bank looking to profit as Wall Street giants push to ‘debank’ conservatives, New York Post, February 7, 2025
I have written before about the debanking debate. I continue to think it is a fully manufactured crisis, a phenomenon that shows more about the debanked entities apophenia than it does about real problems. To be clear, I do not doubt for a second that some customers, including as part of common industries or other groups, saw their access to their banks terminated by the banks.
What I doubt is whether this was some grand architectural strategy by either banks or regulators except as can be justified by sound risk management practices. If we cut off banks’ abilities to manage their asset exposure, we have turned them into utilities with a de facto universal service mandate. Some people think this is indeed what we should do. For those who want to see more heterogeneity among private sector risk-takers, shoving banks toward the utility model is not a good idea.
Anyway, Old Glory Bank is a bank I have never heard of that is market correcting for a market failure if indeed it is a market failure. It is advertising in search of those very market segments that got risk adjusted. Let’s cheer them on—that’s how these things are supposed to work.
Banking Sector Vet Rodney Hood Named Acting OCC Head, PYMTS.com, February 9, 2025.
This is welcome news. I met Rodney Hood briefly a few years ago at a conference and was struck by his thoughtful perspectives on credit unions and their place in the financial ecosystem of the United States. My Bayesian priors are that the largest credit unions are a regulatory arbitrage, that there is no such thing as a “common bond” and that they should be taxed and regulated on equal terms with banks.
But that just makes Hood’s appointment at the OCC all the more delicious. He will now be in charge of those very institutions that view large credit unions as a major threat, at least for smaller banks (that admittedly are mostly state-chartered).
It is also a chance to reflect for a minute on Michael Hsu’s tenure. That’s worth more time and more space another day, but I think Hsu’s four years in his role were wonderful. I read every speech he made and learned something from each one. It may well be a coincidence that national banks did not face the same failures as state-chartered banks during the regional crisis of 2023, but I doubt it. The OCC is a successful bank regulator and supervisor.
Let’s hope that Hood carries on similar traditions of excellence, even as he focuses regulatory and supervisory priorities in decidedly different directions.
Trump’s Executive Orders Leave Imprint on the Fed, New York Times, February 7, 2025
First off, welcome to Colby Smith formerly of the Financial Times as the new Fed reporter (news I had been looking forward to seeing since the former NYT Fed reporter, the great Jeanna Smialek, announced she was moving on to the NYT’s Europe desk).
Second, this is an intriguing article. I think I will now call the Fed’s approach to politics in 2025 “The Blessing on the Czar” from The Fiddler on the Roof. Is there a proper blessing for the Trump Administration for the Federal Reserve, a young central banker may ask Jay Powell? A proper blessing? May the fates1 bless and keep President Trump…far away from us!”
I will never tire from noting how deeply political the Fed, down to its DNA. (Here is a post where I praise Jay Powell for his political instincts.) But is a self-imposed hiring freeze, the removal of any trace of diversity or climate from its agenda, and the other sudden pivots that the Fed has announced going to succeed? I am willing to give Powell and the Fed the benefit of the doubt, but, to change my metaphors, the Fed is a frog in a pot and the current environment is an open flame. I hope they have a good sense to know when to jump.
False consciousness and the dominant ideology thesis, Dan Williams, Conspicuous Cognition, February 6, 2025
I discovered philosopher Dan Williams’s Substack only recently and wow, am I glad I did. He writes extremely thoughtfully on all matters dealing with truth, ideology, politics, epistemology, and more. This is not easy reading, but it is incredibly useful as an antidote to the certainty of (in this case) Marxism and Marxist conceptions of “false consciousness”. Williams is tackling the age-old question of why people would ever act—or vote, or speak—against their own interests. Fascinating exploration in the history of ideas. Williams’s posts bang around in my head for many days after the fact.
Now Is Not the Time to Tune Out, New York Times editorial, February 8, 2025
Speaking of, here’s an article from the New York Times that I hated.
Now might in fact be the perfect time to tune out or, at the very least, dial it back a minute.
We have in the United States several national past-times, none more potent nor likelier to lead to more delusional certainty than politics. One of the fundamental realities of my world is that I know so many people who feel such fire in their bellies, left and right, that they must do battle to save life as they understand it, for that form of life is under siege. So many times I have heard others describe their ideological opponents in the most searing ways, with so much hostility, leading to the appropriate conclusion: how could such people be so stupid? (Williams, in the link above, highlights some manifestations of this view on the left and right; ironically, they are part of the same ideological community where their side holds the monopoly on perception.)
There is a lot happening right now. An informed citizenry is a public good. People should make their voices heard and should inform themselves of the debates and dilemmas of the day. I have no quarrel there.
But for the love of this great world, we individually should take a break from time to time. Make some friends in real life where you never talk about politics. Read some books and put down your phones.
I worry that one of the great casualties of our always-on political obsessions is that we are destroying our capacity for sustained engagement with each other in fora that have nothing to do with this or that latest outrage from this or that latest decision from this or that latest far-off politician. Perhaps our individual act of civil disobedience to restore your sanity can be to turn it down or even turn it off from time to time. It will be waiting for you when you come back, I promise.
Also, keep the memes of the frowny faces of Travis Kelce, Taylor Swift, Patrick Mahomes, and Andy Reid coming. They are exquisite.
The “fates” instead of God because I don’t think the central bankers are particularly religious.
I was not familiar with Old Glory Bank either, but it turned out to be a nice surprise during the Senate hearing. It made my day when the CEO said, "Instead of sitting around complaining about what the Big Banks were doing, we created Old Glory Bank to be a market response." It's unfortunate how many people are instead calling for the government (state and federal) to step in.