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Seeing like a Bank

Bits About Money – Patrick McKenzie The New York Times recently ran a piece on a purported sudden spate of banks closing customer accounts. Little of it is surprising if you have read previous issues of Bits about Money. The reported anecdotal user experiences have a common theme to them. Banks frequently present to their users as notably disorganized, discombobulated institutions. This is an alarming and surprising fact for the parts of society that are supposed to accurately keep track of all of the money. Why does this happen? Why does it happen across issues as diverse as bank-initiated account closures, credit card or Zelle fraud, debit card reissuance, and mortgage foreclosures? Why does it happen in such a similar fashion across many institutions, of all sizes, who exist in vicious competition with each other and who know their customers hate this? Banks are extremely good at tracking one kind of truth, ledgers. They are extremely bad at tracking certain other forms of truth, for structural reasons. In pathological cases, which are extremely uncommon relative to all banking activity but which nonetheless happen every day and which will impact some people extremely disproportionately, the bank will appear to lack object permanence. Every interaction of the user with it feels like being Bill Murray in Groundhog Day: the people you’re talking to remember literally nothing of what they’ve promised before, what you’ve told them, and the months or years of history that lead to this moment. How did we end up here?…”

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