Legal Analysis | Executive Orders, Politicized Debanking, and the Cost of Steam's Surrender (VL)

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Hello, and welcome to another episode of
Virtual Legality.
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I'm your host, Richard Hoag, managing member of
the Hoag Law Business Law Firm of Northville,
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Michigan.
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And today, we're diving once again into the
story about payment processors, the financial
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infrastructure systems, and video games insofar
as they are preventing video game purveyors
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like Steam and itch.i0 from selling adult
facing content that is otherwise legal in the
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jurisdictions that we're talking about, in
particularity, The United States.
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And in also particularity, we're gonna talk
about an executive order today that was signed
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by president Trump that has been described, as
you can see on your screen right now, by some
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as essentially destroying the payment
processors and what it is that they've tried to
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do by encouraging steam and itch.i0 to get rid
of these products and services.
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Now as lawyers are won't to do, I'm here in
virtual reality to pour a bit of cold water on
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this particular notion that the payment
processors, the financial industry on the
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whole, is somehow screwed, as this particular
thumbnail puts it, or destroyed by the notion
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of an executive order signed by president
Trump, or at least this particular executive
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order that we are about to read as part of this
video.
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And I also wanted to bring up another tweet
that I saw from a commenter called Vera Dark.
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And, again, if you're in Virtual Galley for the
first time here, I don't endorse any particular
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readings of anything that I'm looking at when I
talk about them in this space, but there are
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folks on Twitter, on social media that are
making commentary like this one.
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I found it particularly useful to dive into
that I think are a little bit wrongheaded.
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Not that there's anything wrong with taking a
crack at evaluating these things on your own.
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I highly recommend it for anybody that's
watching or listening to this show.
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But in this particular case, we can take what
Vera says here, and we can analyze it as part
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of this video and see how she misses the mark a
little bit.
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As she puts it, this executive order came down
today, and it clearly states banking services
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can't be denied because of protections provided
by the constitution of The United States.
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That seems to be implying the first amendment
freedom of expression issues that we've talked
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about as part of this series.
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It mentions companies have a hundred and eighty
days to remove any provisions from their terms
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of service that mention reputational damage to
themselves due to the fact that they must
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provide all lawful citizens with banking
services.
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Now that's a misunderstanding of what this
executive order is going to do.
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We're going to dive into that as part of this
video.
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Companies like Visa, Mastercard can no longer
deny payment for something that, in their
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opinion, lacks artistic value, but is legal in
The US.
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And that goes too far with what this executive
order says as well, which Valve had pointed to
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their rule that outlines the sales of products
or services that are, quote, unquote, patently
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offensive and lack serious artistic value or
any other material that the corporation deems
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unacceptable to sell in connection with their
mark, their trademark, as a violation of the
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rule that they put forth.
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That's a reference to the Mastercard rule we
saw cited by Steam and that we discussed in the
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prior video in this series.
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Ultimately, creators can't have funding sources
ripped away from them over political opinions
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deemed damaging.
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And so I wanted to highlight this commentary
because this is the same kind of comments that
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I saw online so often with respect to this
story, and I think it goes too far.
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It's incorrect in important ways that I think
lead people to believe that, one, this fight is
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over when it very much isn't.
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That if you care about these things, if you
care about Visa, Mastercard, PayPal, or
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whomever forcing Steam and itch.i0 to not sell
what those services want to sell to you and
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which are legal in the jurisdictions we're
talking about, then you have a continuing fight
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to engage in on this particular topic.
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But, also, I just wanted to talk about what an
executive order actually is, what it isn't, and
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so we can better understand what it is that
president Trump or any other president in The
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United States or any other jurisdiction is
actually capable of doing on this score with a
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method like an executive order.
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So on that note, please hang in there.
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We're gonna get into the weeds on this.
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But before we do, I wanted to mention that this
channel is supported by viewers and listeners
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like you through Patreon, through memberships
and super chats, and other things that you can
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do to tell Google that you are enjoying this
kind of commentary.
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Also, among those things are leaving comments.
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This particular topic tends to rub the
algorithms of the world the wrong way because
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we're gonna say words that the algorithms don't
like when we talk about these things.
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And as I said in my prior video, we're not
going to restrict ourselves from saying those
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words.
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I find it anathema to talking about censorship
by only censoring myself to using words that
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the algorithm approves of.
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So please do leave comments, leave likes, leave
dislikes, whatever it is that actually touches
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Google and YouTube's buttons.
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It really appreciates that.
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It seems to let these videos be seen farther
and wider than they would be without that
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process.
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So if you're interested in these types of
conversations and you find them useful, please
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do leave a comment.
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I also try to read those as much as I can and
get to answers of questions that people have in
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those comments as well.
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So please do consider that.
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Now as I said, we're gonna get into the weeds
here.
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And as I promised, we're gonna get into the
weeds on a legal basis as this is a legal
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facing YouTube channel.
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So the first thing we need to understand is
what an executive order is.
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So I've highlighted here the three branches of
the US federal government.
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I assume for most United States listeners and
viewers that you got some version of this in
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elementary school, but we have a lot of
international viewers and listeners on this
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channel, and I wanna make sure that we're clear
on what is and isn't happening here.
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So I've put three boxes on your screen, one
labeled judicial, one labeled executive, and
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one labeled legislative to show the three
branches of the US government.
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Now we call these coequal insofar as they have
checks and balances and things that they can do
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and can't do and fight against each other in
certain ways.
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They aren't necessarily equal in every
instance, but it is a useful kind of rubric to
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think about that the judicial executive and
legislative can't really do everything that the
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US federal government wants to do on any given
issue.
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And to underscore that a little bit more, I've
highlighted what it is that we're talking about
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here and what it is that they do and don't do.
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So on your board right now, you see executive
branch in blue.
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That's the branch that is going to be issuing
an executive order.
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That's the president of The United States.
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And I've highlighted here that his job is
enforcer.
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He enforces the laws, and he sets enforcement
priorities through things like executive
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orders.
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He tells the executive branch what he wants to
have happen in the enforcement of laws, but he
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doesn't write those laws.
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Who writes the laws?
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The legislative branch writes those laws.
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They are the rules maker.
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They are the ones putting forth what the public
policy of The United States actually is.
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You'll hear newsmakers talk about the fact that
the president sets public policy.
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That's true insofar as he asks the legislature
to do things for him.
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It isn't true when we're talking about
executive orders like the one we're about to
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talk about today.
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The legislative are the ones that evaluate what
the problems of the country are, determine what
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the public policy of the country should be, and
rights laws around that public policy.
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The executive then goes to enforce those laws
as written by the legislative, but they are not
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the final arbiter of whether a law has been
broken.
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They go to enforce them by maybe bringing an
action in court, and then the judicial branch
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actually interprets what the law says and
decides the cases and controversies before it.
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So, yes, coequal branches doing different
things, but what's important about this story
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is that an executive order is not a law.
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It is a set of enforcement priorities that only
govern the executive branch itself.
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So your first takeaway when you're talking
about this issue with others, online or
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otherwise, is that executive orders govern the
executive branch.
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The executive branch is huge.
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It's multi thousands of people, agencies all
over the place.
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We've talked about a lot of them here in
virtual legality.
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An executive order says, alright, agency.
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I want you to think about this issue this way.
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I want you to enforce it in this manner, but an
executive order does not control the citizenry.
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It does not control the judiciary.
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The executive branch can say, this is what I
think this law says, and this is how I want you
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to enforce it.
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The agencies can take that under advisement and
do what the president asks.
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That's what they're supposed to do in the
executive branch, but that doesn't control what
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the court might say the law actually says.
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It's just one person's evaluation of what it
says, and they don't have the power.
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They don't have the authority to evaluate that
for all the citizens of the country.
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So we'll talk about that as we go on in this
video, but the judiciary is going to have an
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important role to play in whether or not the
executive order we're about to read can even
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take effect to the extent that the president
seems to be advocating it too.
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So as we dive in here, in the guaranteeing fair
banking for all Americans executive order
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issued on 08/07/2025, we'll see certain areas
in which the presidency and the executive
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branch on the whole maybe try to steal a base,
maybe go a step further than an executive order
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really allows them to do, and the courts are
not always gonna look to so kindly upon that.
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That's our first kind of commentary.
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Executive orders cannot control the citizenry.
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They cannot actually order Mastercard or Visa
or PayPal or anyone else to do anything.
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What they can do is tell the people that
already work in the executive branch, the
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agencies and whatnot, what it is that the
president wants to see them do.
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So first, we start out with what we might call
recitals in a legal document here where we
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establish what the problem is.
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We talk about what issue we're trying to
address with this executive order.
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Section one, purpose.
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Financial institutions have engaged in
unacceptable practices to restrict law abiding
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individuals and businesses access to financial
services on the basis of political or religious
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beliefs or lawful business activities.
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So first and foremost, we see here that the
purpose is to address financial institutions
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engaging in what the president deems to be
unacceptable practices.
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Financial institutions are not what we're
talking about necessarily with respect to the
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video game situation.
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We're talking more about the processors, the
people that allow the money to move between
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banks rather than the banks themselves, the
financial institutions on the whole.
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We also note in this first sentence that the
focus appears to be on political or religious
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beliefs even though lawful business activities
are also included in the second category.
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So we already have a concern that this isn't
aimed directly at what we'd want it to be aimed
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at, which I will spoiler spoiler alert for you
here, it is not.
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Some financial institutions participated in
government directed surveillance programs
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targeting persons participating in activities
and causes commonly associated with
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conservatism and the political right following
the events that occurred at or near The United
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States Capitol on 01/06/2021.
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Here again, we say, uh-oh.
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Alright.
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So this executive order is really concerned
about debanking.
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Right?
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It's really concerned, as the headline says,
making banking fair for all Americans, but it's
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really concerned about that from the concept
that the banks, the financial institutions of
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the country were erroneously surveilling and
otherwise harming people that were associated
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with conservatism and the political right.
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Now I don't know how you choose to characterize
Steam and itch.io getting rid of adult games on
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their services, but I don't think that that is
a step taken by Steam or Itch to specifically
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advocate for conservatism or the political
right.
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In fact, the most common refrain in terms of
arguing against these particular censoring
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activities is that conservatives in the
political right are the ones at Collective
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Shout, the advocacy group that has moved for
some of these actions to take place.
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And so if anything, steam and itch trying to
fight the payment processors on this are
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advocating for a more liberal kind of concept
in terms of what they should be allowed to
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sell.
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So if this executive order were limited only to
telling banks that they can't harm
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conservatives and the political right, we would
look at this and say that's a really difficult
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case to make for Steam and Itch against Visa,
Mastercard, PayPal, or whomever.
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But that's not all this says, so we can
continue to read on.
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The federal government suggested that such
institutions flag individuals who made
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transactions related to companies like Cabela's
and Bass Pro Shop or who made peer to peer
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payments that involved terms like Trump or
MAGA, even though there was no specific
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evidence tying those individuals to criminal
conduct.
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So here, we see that the issue that the
president poses in this purpose section is that
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banks were debanking people for saying nice
things about, right leaning politicians or
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politics, and also that the federal government
was taking an extra step in suggesting to banks
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that they debank folks that shopped at places
that might otherwise reflect conservative or
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right leaning political views.
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And I think it's easy enough to look at this
situation and say, alright.
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If that is in fact the case, if that is in fact
what happened, then this seems appropriate to
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say, banks, you shouldn't be doing that.
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We already talked about payment processors
being essentially infrastructural common
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carrier type entities.
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Banks, certainly in 2025 and the twenty first
century on the whole, digital banking and the
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economy on a global basis are that same kind of
infrastructure piece of the economy.
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And so this all makes sense.
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And so far as it is written here, we don't have
the kind of evidence to suggest this actually
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happened in the way it is stated here in the
purpose section, but that's not what an
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executive order does.
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So we press on.
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Bank regulators have used supervisory scrutiny
and other influence over regulated banks to
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direct or otherwise encourage politicized or
unlawful debanking activities.
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Quote, unquote, operation chokepoint, for
example, was a well documented and systemic
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means by which federal regulators put pushed
banks to minimize their involvement with
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individuals and companies engaged in lawful
activities and industries disfavored by
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regulators based on factors other than
individualized objective risk based standards.
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So here, they're saying, okay.
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The federal government in the past had an
operation, quote, unquote, operation choke
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point that said, we're gonna push you to debank
folks that we don't find terribly helpful to
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our political cause, and that the banks did
that, other than for reasons based on risk.
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Now I highlighted in this discussion other than
individualized objective risk based standards
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because this is the kind of concept that
probably needs a defined term, probably would
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00:14:01,835 --> 00:14:06,075
need in a law a specific section talking about
what we mean by this term.
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00:14:06,394 --> 00:14:09,914
We can understand it intuitively as something
like, alright, bank.
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You can look at somebody's income level.
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You can look at what they they do with their
money, and you can say, I don't wanna make this
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loan.
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I don't wanna allow this banking service
because I feel like you are more likely to
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default on your loan or your checking account
or what have you.
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And if we can make that kind of actuarial
argument, then we can otherwise not work with
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you, and we have to be able to do that because
otherwise we can't stay in business.
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00:14:33,235 --> 00:14:38,995
But just saying you shop at Cabela's is not
something that we think would otherwise
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indicate a higher level of risk for loans or
checking accounts or otherwise.
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And so if you were doing this on some other
basis, then we've got a problem.
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The issue with this from the perspective of the
story we're talking about is that the
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00:14:50,330 --> 00:14:54,649
Mastercard rule we mentioned in the prior video
essentially says Mastercard can look at a
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00:14:54,649 --> 00:14:57,129
situation and say, this increases our corporate
risk.
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00:14:57,254 --> 00:14:58,375
It can be economic.
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00:14:58,375 --> 00:14:59,495
It can be reputational.
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00:14:59,495 --> 00:15:00,774
It can be any of these things.
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And if it so increases that risk, we can tell
you we might be concerned about this.
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00:15:05,815 --> 00:15:10,054
And as we also talked about in that prior
video, Mastercard itself doesn't necessarily
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00:15:10,054 --> 00:15:14,330
have to say anything when its financial
partners can be told that this rule exists, and
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00:15:14,330 --> 00:15:19,850
they can put the the push down on Steam or Itch
or anyone else that says Mastercard might have
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00:15:19,850 --> 00:15:20,809
an issue with this.
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00:15:20,970 --> 00:15:23,769
And then Steam adds a rule that says, okay,
developers.
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Don't add anything to our service that's that
Mastercard might have an issue with, which is
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00:15:27,745 --> 00:15:29,904
obviously an impossible situation for
Mastercard.
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00:15:29,904 --> 00:15:31,584
It's an impossible situation for the devs.
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00:15:31,584 --> 00:15:33,345
It's an impossible situation for Steam.
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00:15:33,424 --> 00:15:38,865
But that's where we exist right now, none of
which necessarily speaks to anything that isn't
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00:15:38,865 --> 00:15:41,264
an individualized objective risk based
standard.
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00:15:41,610 --> 00:15:46,089
So we already have our first issue with kind of
vagueness here, which is to say, alright.
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00:15:46,089 --> 00:15:50,009
If that's the basis you're going to use for
your rule, and spoiler again, it is, then we've
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00:15:50,009 --> 00:15:55,065
got an issue with these payment processors or
even these banks being able to say, well, look.
258
00:15:55,065 --> 00:15:57,304
That is an individualized objective risk based
standard.
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00:15:57,304 --> 00:16:01,065
We don't wanna work with incest porn video
games.
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00:16:01,065 --> 00:16:04,664
We think that increases the likelihood that
Steam or its users are gonna cause a problem
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00:16:04,664 --> 00:16:07,225
for us either reputationally or economically.
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00:16:07,529 --> 00:16:10,410
And so that's a legitimate business interest
that we have.
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00:16:10,410 --> 00:16:12,170
And so go away executive order.
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00:16:12,170 --> 00:16:13,930
We're not really concerned about any of this.
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00:16:14,330 --> 00:16:18,570
Continuing, as a result, individuals, their
businesses, and their families have been
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00:16:18,570 --> 00:16:23,305
subjected to debanking on the basis of their
political affiliations, religious beliefs, or
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00:16:23,305 --> 00:16:24,504
lawful business activities.
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00:16:24,504 --> 00:16:27,865
And you see that last category is what we're
talking about because I don't really believe
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00:16:27,865 --> 00:16:32,825
that the sales of video games on Steam or Itch
are politically affiliated or religious beliefs
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00:16:33,065 --> 00:16:37,610
and have suffered frozen payrolls, debt, and
crushing interest, and other significant harms
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00:16:37,610 --> 00:16:40,730
to their livelihoods, reputations, and
financial well-being.
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00:16:40,970 --> 00:16:45,210
Such practices are incompatible with a free
society and the principle that the provision of
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00:16:45,210 --> 00:16:49,769
banking services should be based on material,
measurable, and justifiable risks.
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00:16:49,769 --> 00:16:54,365
I e, again, we don't have a problem with you
coming to the conclusion that somebody is a
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00:16:54,365 --> 00:16:55,965
risk to your loan portfolio.
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00:16:55,965 --> 00:16:57,325
You don't wanna issue them money.
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00:16:57,325 --> 00:17:01,485
We're not going to mandate that you otherwise
loan things to people or otherwise open
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00:17:01,485 --> 00:17:04,765
checking accounts for everybody that walks in
your door, even though the federal government
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00:17:04,765 --> 00:17:06,525
does that in certain important respects.
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00:17:07,079 --> 00:17:11,480
They further undermine public trust in banking
institutions and their regulators, discriminate
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00:17:11,480 --> 00:17:15,799
against political beliefs and free expression
of those beliefs, and weaponize a politicized
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00:17:15,799 --> 00:17:17,239
regulatory state.
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00:17:18,039 --> 00:17:18,679
Policy.
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00:17:19,154 --> 00:17:23,234
It is the policy of The United States that no
American should be denied access to financial
285
00:17:23,234 --> 00:17:28,115
services because of their constitutionally or
statutorily protected beliefs, affiliations, or
286
00:17:28,115 --> 00:17:28,994
political views.
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00:17:28,994 --> 00:17:31,795
Now the first part of that sentence sounds like
we're aimed directly at what we're talking
288
00:17:31,795 --> 00:17:32,035
about.
289
00:17:32,035 --> 00:17:32,275
Right?
290
00:17:32,275 --> 00:17:36,599
Mastercard, Visa, PayPal, whomever, arguing
against Steam and Itch being allowed to sell
291
00:17:36,599 --> 00:17:40,679
what they are otherwise legally allowed to
sell, and that might be its own issue.
292
00:17:40,679 --> 00:17:44,679
But, again, comes the concept that we
highlighted at the top of this, that what we're
293
00:17:44,679 --> 00:17:49,355
really concerned about if we are the executive
branch of the United States are actions that go
294
00:17:49,355 --> 00:17:51,994
against beliefs, affiliations, or political
views.
295
00:17:51,994 --> 00:17:56,714
It's very difficult for me to imagine Steam or
Itch arguing that their sales of these games
296
00:17:56,714 --> 00:18:00,794
qualify for that, except on the broadest basis
of we should have the freedom to sell whatever
297
00:18:00,794 --> 00:18:01,115
we want.
298
00:18:01,619 --> 00:18:06,259
Banking decisions must instead be made on the
basis of individualized objective and risk
299
00:18:06,259 --> 00:18:07,619
based analyses.
300
00:18:08,099 --> 00:18:09,059
Definitions.
301
00:18:09,059 --> 00:18:14,434
The term politicized or unlawful debanking
refers to an act by a bank, savings
302
00:18:14,434 --> 00:18:19,634
association, credit union, or other financial
services provider to directly or indirectly
303
00:18:19,634 --> 00:18:24,434
adversely restrict access to or adversely
modify the conditions of accounts, loans, or
304
00:18:24,434 --> 00:18:29,109
other banking products or financial services of
any customer or potential customer on the basis
305
00:18:29,109 --> 00:18:34,309
of the customer or potential customer's
political or religious beliefs or on the basis
306
00:18:34,309 --> 00:18:37,990
of the customer's or potential customer's
lawful business activities that the financial
307
00:18:37,990 --> 00:18:42,424
service provider disagrees with or disfavors
for political reasons.
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00:18:42,744 --> 00:18:44,025
So a lot to unpack there.
309
00:18:44,025 --> 00:18:45,305
Obviously, that's full legalese.
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00:18:45,305 --> 00:18:49,465
We're getting into the law part of this entire
conversation, but let's start unpacking.
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00:18:49,465 --> 00:18:53,945
First, we note that what we're really talking
about here at the top of this definition are
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00:18:53,945 --> 00:18:54,265
banks.
313
00:18:54,329 --> 00:18:54,649
Right?
314
00:18:54,649 --> 00:18:56,569
This is the debanking executive order.
315
00:18:56,569 --> 00:18:59,369
This isn't really about payment processing at
all.
316
00:18:59,369 --> 00:19:04,009
Although, the definition is written broadly
enough to grab what we're talking about with
317
00:19:04,009 --> 00:19:08,285
respect to processing credit card payments into
Steam or Itch or anyone else.
318
00:19:08,285 --> 00:19:08,605
Right?
319
00:19:08,605 --> 00:19:13,724
We can read this to just point directly at
other financial service providers, restricting
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00:19:13,724 --> 00:19:15,884
access to financial services, and say, yep.
321
00:19:15,964 --> 00:19:19,404
That hits what we needed to hit from what we're
talking about as part of this conversation.
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00:19:19,484 --> 00:19:24,799
But we have to note, as certainly Mastercard
and Visa and anybody else would note in reading
323
00:19:24,799 --> 00:19:26,960
this, that this is not aimed at us.
324
00:19:26,960 --> 00:19:28,079
This is aimed at banks.
325
00:19:28,079 --> 00:19:29,440
This is aimed at debanking.
326
00:19:29,440 --> 00:19:33,119
Furthermore, it's aimed specifically at
debanking for political or religious beliefs
327
00:19:33,525 --> 00:19:38,644
and only really restricts us from doing things
that harm people's lawful business activities
328
00:19:38,884 --> 00:19:43,444
if we did it because we disfavor those
activities for political reasons.
329
00:19:43,605 --> 00:19:48,470
Now it's easy enough to get out there on the
streets and argue that what Visa and Mastercard
330
00:19:48,470 --> 00:19:56,549
are against here are things that are lewd or
things that are something that don't agree with
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00:19:56,549 --> 00:19:59,670
their political affiliations as companies.
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00:20:00,194 --> 00:20:06,515
But it's more difficult to see them disfavoring
these things as political reasons from a
333
00:20:06,515 --> 00:20:10,594
conservative versus liberal perspective or
anything that we might consider politics
334
00:20:10,755 --> 00:20:15,900
outside of the overall everything personal is
political kind of concepts, which is not what
335
00:20:15,900 --> 00:20:16,619
the law aims at.
336
00:20:16,619 --> 00:20:18,460
It's not what this language aims at.
337
00:20:18,539 --> 00:20:24,619
So are Visa and Mastercard doing this to steam
an itch for political reasons?
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00:20:25,154 --> 00:20:28,674
You'd have to make a pretty narrow argument,
and certainly Visa and Mastercard would make
339
00:20:28,674 --> 00:20:29,795
the opposite argument.
340
00:20:29,795 --> 00:20:33,634
They're doing this because of the brand damage
they think would happen with respect to their
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00:20:33,634 --> 00:20:35,154
brands if they allowed these things.
342
00:20:35,154 --> 00:20:40,160
And if it came down to it, they're doing it
because we think that services that provide
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00:20:40,160 --> 00:20:45,279
these types of products to their customers are
more likely to default for some reason that we
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00:20:45,279 --> 00:20:50,799
could probably make with the copious amounts of
data at our fingertips if we're Visa,
345
00:20:50,799 --> 00:20:55,184
Mastercard, PayPal, or anyone else in the
financial processing arena.
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00:20:55,345 --> 00:20:57,424
So we've got issues with the definitions there.
347
00:20:57,424 --> 00:21:00,865
We do note again that it's just not aimed at
what we want it to be aimed at.
348
00:21:00,865 --> 00:21:05,744
So when we talk about the commentary that we
mentioned at the top of this video, it has to
349
00:21:05,744 --> 00:21:10,240
be part of the conversation that this executive
order not only just controls the executive
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00:21:10,240 --> 00:21:15,279
branch and not the Visa and Mastercards of the
world, but also isn't really aimed at this
351
00:21:15,279 --> 00:21:16,000
particular issue.
352
00:21:16,000 --> 00:21:20,400
It's aimed at an adjacent issue, which might
well be applicable to the issue that we're
353
00:21:20,400 --> 00:21:22,400
concerned about when we talk about it in
virtual legality.
354
00:21:22,684 --> 00:21:28,525
But as it not being aimed directly at it, would
be fairly easy for the payment processors in
355
00:21:28,525 --> 00:21:30,524
this particular story to skate around.
356
00:21:30,924 --> 00:21:35,085
Now the term federal banking regulators, as
stated in this executive order, refers to the
357
00:21:35,085 --> 00:21:39,420
Small Business Administration, SBA, and the
federal member agencies of the Financial
358
00:21:39,420 --> 00:21:44,380
Stability Oversight Council with supervisory
and regulatory authority over banks, saving
359
00:21:44,380 --> 00:21:46,140
associations, or credit unions.
360
00:21:46,220 --> 00:21:50,220
So looking at this, like we mentioned at the
top, executive orders can only control the
361
00:21:50,220 --> 00:21:51,099
executive branch.
362
00:21:51,099 --> 00:21:54,465
This executive order is aimed at federal
banking regulators.
363
00:21:54,465 --> 00:22:00,465
It is aimed at telling the SBA and the other
federal member agencies that otherwise license
364
00:22:00,465 --> 00:22:04,785
the banks in The United States, and I'm gonna
shorthand this considerably.
365
00:22:04,785 --> 00:22:09,269
So if you're a lawyer in the credit industry
and you're in the comments, you can let the
366
00:22:09,269 --> 00:22:14,710
folks know exactly how much my shortening has
missed the message of what it is that federal
367
00:22:14,710 --> 00:22:17,830
regulators regulators do in the banking
industry.
368
00:22:17,984 --> 00:22:21,825
But these are the folks that license banks, if
you don't do what they say, if you don't
369
00:22:21,825 --> 00:22:25,984
operate in the way that they tell you, then you
can lose your ability to perform banking
370
00:22:25,984 --> 00:22:27,184
services in The United States.
371
00:22:27,184 --> 00:22:32,500
And so they're very important regulators, in
the country, but they are the only bodies that
372
00:22:32,500 --> 00:22:37,220
president Trump has the authority to kind of
order around in a manner like this one.
373
00:22:37,539 --> 00:22:41,779
Sec section four, removing reputation risk and
politicized or unlawful debanking.
374
00:22:41,779 --> 00:22:45,779
Now this is the section that we saw the
commentator Vera talking about earlier,
375
00:22:46,115 --> 00:22:50,355
suggesting, as she did, that it mentions that
companies have a hundred and eighty days to
376
00:22:50,355 --> 00:22:53,315
remove any provisions from their terms of
service that mention reputational damage to
377
00:22:53,315 --> 00:22:53,954
themselves.
378
00:22:54,035 --> 00:22:57,474
That's not what's happening in this section, so
let's see what is happening.
379
00:22:57,555 --> 00:23:01,779
Within a hundred and eighty days of the date of
this order, each appropriate federal banking
380
00:23:01,779 --> 00:23:06,179
regulator shall, to the greatest extent
permitted by law, remove the use of reputation
381
00:23:06,179 --> 00:23:10,500
risk or equivalent concepts that could result
in politicized or unlawful debanking, as well
382
00:23:10,500 --> 00:23:14,545
as any other considerations that could be used
to engage in such debanking from their guidance
383
00:23:14,545 --> 00:23:17,265
documents, manuals, and other materials.
384
00:23:17,585 --> 00:23:23,505
So what that says is that the people under my
purview, if I'm president Trump, will take out
385
00:23:23,505 --> 00:23:28,569
of their recommendations for how to comply with
our rules and regulations that you can use
386
00:23:28,569 --> 00:23:34,569
reputation risk or equivalent concepts in your
materials because, according to president Trump
387
00:23:34,569 --> 00:23:39,210
and his executive branch here, that allows for
too much leeway for you to start debanking
388
00:23:39,210 --> 00:23:40,889
people on political grounds.
389
00:23:41,164 --> 00:23:45,244
But what he doesn't do, what he can't do, what
he doesn't have the authority to do is tell
390
00:23:45,244 --> 00:23:48,684
Visa and Mastercard that they can't have that
rule in place.
391
00:23:48,684 --> 00:23:53,565
He can tell his regulators to say that's not a
recommendation, and maybe we'll penalize you.
392
00:23:53,565 --> 00:23:58,710
We'll see that a little bit further on in the
executive order, but he can't tell them what to
393
00:23:58,710 --> 00:23:58,950
do.
394
00:23:58,950 --> 00:23:59,830
They are the citizenry.
395
00:23:59,830 --> 00:24:02,470
They are outside his purview in this context.
396
00:24:02,470 --> 00:24:06,630
That's why when we have major issues in The
United States, when other folks have major
397
00:24:06,630 --> 00:24:11,234
issues in their jurisdictions, I always tell
you, you can't depend on the executive order
398
00:24:11,234 --> 00:24:11,714
process.
399
00:24:11,714 --> 00:24:13,154
You have to actually pass laws.
400
00:24:13,154 --> 00:24:15,954
This was not that controversial not so long
ago.
401
00:24:15,954 --> 00:24:20,595
But if you wanna fix things on a policy basis
in the country of your choice, you actually
402
00:24:20,595 --> 00:24:25,730
have to go and get whatever version of the
rules that are passed by your representatives
403
00:24:25,809 --> 00:24:31,090
in the books more than you have to get
executive orders and kind of policy
404
00:24:31,090 --> 00:24:35,410
preferences, established by the executive here
in The United States.
405
00:24:35,744 --> 00:24:37,825
So that's what this actually says.
406
00:24:37,984 --> 00:24:40,625
Then we note the parenthetical, which is super
important here.
407
00:24:40,625 --> 00:24:45,424
We just told you that you should remove all
references, reputation risk, other than exec
408
00:24:45,585 --> 00:24:49,105
existing regulations or other materials
requiring notice and comment rulemaking.
409
00:24:49,105 --> 00:24:54,210
Now notice and comment rulemaking is how rules
are made by regulators in The United States to
410
00:24:54,210 --> 00:24:57,730
comply with the Administrative Procedures Act
that we actually have to post when we're gonna
411
00:24:57,730 --> 00:25:01,089
do something serious, and we have to take
comments from the public.
412
00:25:01,329 --> 00:25:05,569
And then only after certain time frames have
been passed can those rules go into effect.
413
00:25:05,954 --> 00:25:07,394
So those are the important rules.
414
00:25:07,394 --> 00:25:11,234
Everything else is just guidance documents,
manuals, other materials in this particular
415
00:25:11,234 --> 00:25:11,554
rule.
416
00:25:11,554 --> 00:25:14,115
Those aren't that important to how a bank is
actually licensed.
417
00:25:14,115 --> 00:25:17,154
They aren't important to how the country
actually operates.
418
00:25:17,154 --> 00:25:21,619
They are important insofar as if you're running
a bank, you wanna comply with the regulator
419
00:25:21,619 --> 00:25:24,099
that's breathing down your neck to do various
things.
420
00:25:24,500 --> 00:25:28,339
But the things that aren't going to change as a
part of this executive order are the things
421
00:25:28,339 --> 00:25:32,339
that have actually gone through the formal
process of notice and comment rulemaking.
422
00:25:32,505 --> 00:25:37,305
So we're already talking about a thinner slice
of everything than what we would have been
423
00:25:37,305 --> 00:25:41,785
talking about without this context, but this is
the executive or his lawyers essentially saying
424
00:25:41,785 --> 00:25:48,029
you can't actually ask for anything that goes
beyond these kinds of opaque, somewhat middle
425
00:25:48,029 --> 00:25:52,109
of the road documents described here as
guidance manuals and other materials.
426
00:25:52,349 --> 00:25:54,669
And so you can't take out the real rules.
427
00:25:54,670 --> 00:25:59,549
You can only take out the kind of slight
unwritten type rules that these regulators are
428
00:25:59,549 --> 00:26:00,029
otherwise using.
429
00:26:00,315 --> 00:26:03,835
The federal banking regulators shall also
consider rescinding or amending existing
430
00:26:03,835 --> 00:26:08,634
regulations consistent with applicable law to
eliminate or amend any regulations that could
431
00:26:08,634 --> 00:26:12,714
result in politicized or unlawful debanking and
to ensure that any regulated firms or
432
00:26:12,714 --> 00:26:17,130
individuals' reputation is considered for
regulatory supervisory banking or enforcement
433
00:26:17,130 --> 00:26:21,369
purposes solely to the extent necessary to
reach a reasonable and apolitical risk based
434
00:26:21,369 --> 00:26:21,930
assessment.
435
00:26:21,930 --> 00:26:24,170
So this is the kind of umbrella concept.
436
00:26:24,170 --> 00:26:27,130
Look, regulators, you'll also consider
rescinding.
437
00:26:27,130 --> 00:26:31,505
I'm not actually going to order you to rescind,
but you'll consider rescinding anything that
438
00:26:31,505 --> 00:26:35,984
you find that might otherwise create this gray
area that would allow you to debank on a
439
00:26:35,984 --> 00:26:36,944
political basis.
440
00:26:37,265 --> 00:26:42,920
Now that's obviously very broad, but just like
every other aspect of this story, the agencies
441
00:26:42,920 --> 00:26:47,960
themselves, the federal regulators themselves,
are going to have a certain amount of leeway
442
00:26:47,960 --> 00:26:52,519
themselves to determine what it is to comply
with an order like this one.
443
00:26:52,519 --> 00:26:54,599
And, certainly, this is weak language on its
face.
444
00:26:55,115 --> 00:26:58,955
The SBA, the Small Business Administration,
shall within sixty days of the date of this
445
00:26:58,955 --> 00:27:03,115
order give notice to all financial institutions
with which it guarantees loans under its
446
00:27:03,115 --> 00:27:07,035
lending programs, requiring that each financial
institution that is subject to the SBA's
447
00:27:07,035 --> 00:27:11,430
jurisdiction and supervision within a hundred
and twenty days of this order make reasonable
448
00:27:11,430 --> 00:27:15,590
efforts to identify and reinstate any previous
clients of the institution or any subsidiaries
449
00:27:15,590 --> 00:27:20,309
denied service through politicized or unlawful
debanking action in violation of a statutory or
450
00:27:20,309 --> 00:27:25,085
regulatory requirement under section seven a of
the Small Business Act or any requirement in a
451
00:27:25,085 --> 00:27:29,565
standard operating procedures manual or policy
notice related to a program or function of the
452
00:27:29,565 --> 00:27:33,965
Office of Capital Access with notice of the
reinstatement sent to the victim.
453
00:27:34,720 --> 00:27:37,679
So a lot of legalese again.
454
00:27:37,679 --> 00:27:43,200
But what this says is that the SBA and all the
banks that operate with SBA loans that are
455
00:27:43,200 --> 00:27:48,240
guaranteed by the SBA will tell the banks that
it's affiliated with that they will make
456
00:27:48,240 --> 00:27:53,394
efforts to go and figure out whether they've
done any debanking that would violate the
457
00:27:53,394 --> 00:27:56,275
concepts here in this executive order.
458
00:27:56,275 --> 00:28:00,434
But because the executive order can't set laws,
they actually have to point to rules that might
459
00:28:00,434 --> 00:28:02,035
have been violated by this debanking.
460
00:28:02,099 --> 00:28:07,299
And so they point to section seven a of the
Small Business Act, and they point to operating
461
00:28:07,299 --> 00:28:12,259
procedures, manuals, and policy notices that
are, again, in that kind of unwritten rules,
462
00:28:12,259 --> 00:28:17,625
not quite rule and comment rulemaking type
documentation, and say those are violations.
463
00:28:17,625 --> 00:28:22,105
And so you will go and you will fix these
things, institutions which we are affiliated
464
00:28:22,105 --> 00:28:23,545
with at the SBA.
465
00:28:23,545 --> 00:28:28,025
Now the biggest issue here is as we've already
talked about, the executive branch is not the
466
00:28:28,025 --> 00:28:28,904
judiciary.
467
00:28:28,984 --> 00:28:32,390
So you can make an executive order and say,
alright.
468
00:28:32,390 --> 00:28:37,910
We think this is a problem, and we think that
debanking in this fashion is illegal in some
469
00:28:37,910 --> 00:28:38,789
important way.
470
00:28:38,869 --> 00:28:42,710
But you, people that are operating the bank,
people that are operating the payment
471
00:28:42,710 --> 00:28:46,365
processor, the other financial services
companies might disagree.
472
00:28:46,445 --> 00:28:46,924
Right?
473
00:28:46,924 --> 00:28:51,005
This is actually saying you will go and you
will identify anybody that you debanked in
474
00:28:51,005 --> 00:28:52,365
violation of these rules.
475
00:28:52,525 --> 00:28:56,285
Surely, you didn't think that you were doing it
in violation of the rules when you did it only
476
00:28:56,285 --> 00:28:57,085
a few years ago.
477
00:28:57,630 --> 00:29:02,670
And part of the overall recitals portion of
this document suggested that the government
478
00:29:02,670 --> 00:29:04,990
itself was encouraging banks to do this thing.
479
00:29:05,630 --> 00:29:06,990
So you didn't feel it then.
480
00:29:06,990 --> 00:29:08,349
You probably don't feel it now.
481
00:29:08,430 --> 00:29:12,109
If you don't feel like you're in violation for
whatever it is that you did in the past, then
482
00:29:12,109 --> 00:29:13,825
this doesn't do anything at all.
483
00:29:13,984 --> 00:29:14,224
Right?
484
00:29:14,224 --> 00:29:15,105
The SBA says, alright.
485
00:29:15,105 --> 00:29:19,265
Go flag for your us the people that you did
this to, and you say, well, we're not we're not
486
00:29:19,265 --> 00:29:20,785
bad people here at Bank x.
487
00:29:20,785 --> 00:29:22,224
We didn't do this at all.
488
00:29:22,224 --> 00:29:25,265
There was no violations of section seven a of
the small business act.
489
00:29:25,380 --> 00:29:27,220
That's the loan guarantee program.
490
00:29:27,220 --> 00:29:31,220
We don't know exactly what's in the rest of the
operating procedures manual or policy notice,
491
00:29:31,220 --> 00:29:32,500
but probably very similar.
492
00:29:32,819 --> 00:29:34,980
And so we don't think we violated any rules.
493
00:29:34,980 --> 00:29:39,220
So thank you, SBA, for contacting us with this,
but we don't think we have to tell you about
494
00:29:39,220 --> 00:29:43,565
any victims as you so nicely frame it in this
document.
495
00:29:43,964 --> 00:29:47,005
In addition, the SBA will say within one
hundred and twenty days of the date of this
496
00:29:47,005 --> 00:29:51,164
order, you have to identify all potential
clients denied access to financial services,
497
00:29:51,644 --> 00:29:55,005
through a politicized or unlawful debanking
action in violation of the things we just
498
00:29:55,005 --> 00:29:55,565
talked about.
499
00:29:55,565 --> 00:29:59,029
And within a hundred and twenty days of the
date of this order, you identify all potential
500
00:29:59,029 --> 00:30:03,349
clients denied access to payment processing
services provided by the financial institution
501
00:30:03,349 --> 00:30:07,190
or any subsidiaries through a politicized or
unlawful debanking action with the same
502
00:30:07,190 --> 00:30:07,750
violations.
503
00:30:07,750 --> 00:30:07,909
Right?
504
00:30:07,909 --> 00:30:12,555
So you will go and you will make lists for us
of all the people you screwed over on this
505
00:30:12,555 --> 00:30:16,075
basis, and then we will do something about it
after the fact.
506
00:30:16,634 --> 00:30:21,755
But, again, these banks aren't otherwise gonna
be bound to find that there was a violation of
507
00:30:21,755 --> 00:30:22,075
this type.
508
00:30:22,279 --> 00:30:25,319
The president can't order them to find a
violation.
509
00:30:25,639 --> 00:30:29,079
He can only kinda tell his regulators what he's
looking for, and the regulators can go and
510
00:30:29,079 --> 00:30:32,919
communicate that, and they can certainly press
on some of these banks if they feel they're
511
00:30:32,919 --> 00:30:34,440
being untruthful on these questions.
512
00:30:34,845 --> 00:30:39,964
But it is an attenuated process that doesn't
necessarily lead to anything at this point in
513
00:30:39,964 --> 00:30:40,364
time.
514
00:30:40,845 --> 00:30:43,964
Section five, scrutinizing, politicized, or
unlawful debanking.
515
00:30:43,964 --> 00:30:47,325
Within a hundred and eighty days of the date of
this order, the secretary of the treasury, in
516
00:30:47,325 --> 00:30:51,220
consultation with the assistant of the
president for economic policy, shall develop a
517
00:30:51,220 --> 00:30:55,220
comprehensive strategy for further measures to
combat politicized or unlawful debanking
518
00:30:55,220 --> 00:30:58,819
activities of financial regulators and
financial institutions across the federal
519
00:30:58,819 --> 00:31:03,380
government, including consideration of
legislative or regulatory options to eliminate
520
00:31:03,380 --> 00:31:04,099
such debanking.
521
00:31:04,585 --> 00:31:08,585
Legislative options there being, including
seeing if congress is willing to pass a law on
522
00:31:08,585 --> 00:31:09,065
this.
523
00:31:09,144 --> 00:31:13,545
Regulatory options would be changing rules
within our in house executive branch offices,
524
00:31:13,705 --> 00:31:19,065
which can, of course, play a major factor in
how banks actually operate because they are
525
00:31:18,230 --> 00:31:21,109
fully regulated institutions in The United
States.
526
00:31:21,589 --> 00:31:24,150
But this is where the actual rubber hits the
road.
527
00:31:24,150 --> 00:31:27,029
We're gonna see if we need to do something more
significant than this.
528
00:31:27,109 --> 00:31:33,910
This is the first step of potentially many or
potentially the last step of no further steps
529
00:31:33,585 --> 00:31:35,104
on this particular topic.
530
00:31:35,345 --> 00:31:40,224
And so the executive order should not be seen
as screwing or destroying anyone.
531
00:31:40,224 --> 00:31:44,784
And I know YouTubers and influencers and
commenters are are used to kind of making
532
00:31:44,784 --> 00:31:45,744
headlines like that.
533
00:31:45,744 --> 00:31:51,539
But my job here, as I see it, is to tell you
what the truth of the matter that I can see in
534
00:31:51,539 --> 00:31:53,139
these stories actually is.
535
00:31:53,139 --> 00:31:58,339
And in this particular story, this executive
order is perhaps the weakest starting point
536
00:31:58,500 --> 00:32:04,265
that you can have for this, but you can still
celebrate the win if you're so inclined as the
537
00:32:04,265 --> 00:32:07,544
federal government in The United States
actually being concerned about these kinds of
538
00:32:07,544 --> 00:32:08,024
things.
539
00:32:08,184 --> 00:32:11,065
But we have no indication that they are
concerned about the things that we are
540
00:32:11,065 --> 00:32:15,625
concerned about with respect to video games and
media and the payment processors throwing their
541
00:32:15,625 --> 00:32:18,505
weight around on that score as it stands this
minute.
542
00:32:19,200 --> 00:32:22,720
Within a hundred and twenty days of the date of
this order, each federal banking regulator
543
00:32:22,720 --> 00:32:26,799
shall conduct a review to identify financial
institutions subject to its jurisdiction that
544
00:32:26,799 --> 00:32:32,480
have had any past or current, formal or
informal, policies or practices that require,
545
00:32:32,480 --> 00:32:36,934
encourage, or otherwise influence such
financial institution to engage in politicized
546
00:32:36,934 --> 00:32:41,734
or unlawful debanking and to take appropriate
remedial action to the extent authorized and
547
00:32:41,734 --> 00:32:45,654
consistent with applicable law, including
levying fines, issuing consent decrees,
548
00:32:45,654 --> 00:32:49,340
imposing other disciplinary measures against
any financial institution subject to the
549
00:32:49,340 --> 00:32:55,819
jurisdiction of such banking regulator, that
they were engaged in this unlawful activity,
550
00:32:56,059 --> 00:32:59,580
including reference to section five of the
Federal Trade Commission Act, section ten
551
00:32:59,580 --> 00:33:03,505
thirty one of the Consumer Financial Protection
Act, and the Equal Credit Opportunity Act.
552
00:33:03,505 --> 00:33:05,105
So here he points to laws.
553
00:33:05,184 --> 00:33:05,424
Right?
554
00:33:05,424 --> 00:33:10,545
And this is important because as I said
earlier, they are not the final arbiter of when
555
00:33:10,545 --> 00:33:11,825
a law has been violated.
556
00:33:11,825 --> 00:33:12,945
So we have to look at a few things.
557
00:33:12,945 --> 00:33:18,179
First, we'll look at section seven a of the SBA
or more particularly how the SBA describes its
558
00:33:18,179 --> 00:33:22,339
seven a obligations so that we just understand
what we're talking about with respect to those
559
00:33:22,339 --> 00:33:23,539
SBA obligations.
560
00:33:23,619 --> 00:33:28,179
The seven a loan program is the Small Business
Administration's primary business loan program
561
00:33:28,179 --> 00:33:32,475
for providing financial assistance to small
businesses, but the SBA doesn't loan out the
562
00:33:32,475 --> 00:33:33,355
money directly.
563
00:33:33,674 --> 00:33:39,275
Instead, what the seven a loan program is is
the federal government guaranteeing repayment
564
00:33:39,275 --> 00:33:41,275
of loans to lenders.
565
00:33:41,275 --> 00:33:42,315
So you go to your bank.
566
00:33:42,315 --> 00:33:43,355
You're a small business.
567
00:33:43,355 --> 00:33:48,609
You say, need $5,000,000, and the bank says,
well, based on what you've got in place, that
568
00:33:48,609 --> 00:33:49,569
doesn't make any sense to us.
569
00:33:49,569 --> 00:33:53,490
You're too high of a risk, and the federal
government goes and subsidizes these lenders.
570
00:33:53,490 --> 00:33:59,009
They guarantee the repayment of these loans to
those lenders if they qualify under certain
571
00:33:59,169 --> 00:34:03,184
application type documents for purposes of an
SBA guarantee.
572
00:34:03,184 --> 00:34:06,065
And this is one of those things that I do a
lot, in my line of work.
573
00:34:06,065 --> 00:34:07,025
I have a lot of small businesses.
574
00:34:07,025 --> 00:34:09,184
I have a lot of founders that are looking for
capital.
575
00:34:09,664 --> 00:34:16,320
And the SBA loan program determines exactly how
you are going to go and file for a loan with
576
00:34:16,320 --> 00:34:17,680
your local bank.
577
00:34:17,920 --> 00:34:23,360
And this is one of those things where the SBA
has a major part to play in the economy of
578
00:34:23,360 --> 00:34:27,040
small business in The United States, but they
don't actually give out the money themselves.
579
00:34:27,200 --> 00:34:31,519
They simply guarantee the repayments, to the
financial institutions.
580
00:34:31,519 --> 00:34:34,295
The maximum loan amount for a seven a loan is
$5,000,000.
581
00:34:34,375 --> 00:34:38,534
Key eligibility factors are based on what the
business does to receive its income, its credit
582
00:34:38,534 --> 00:34:40,775
history, and where the business operates.
583
00:34:41,175 --> 00:34:45,359
But importantly, as I just mentioned, they
don't provide the loans directly, although they
584
00:34:45,359 --> 00:34:48,639
can help with the process because they're the
ones that put the rules in place.
585
00:34:48,799 --> 00:34:50,000
So that's a seven a loan.
586
00:34:50,000 --> 00:34:52,480
You could see how the executive branch says,
alright, SBA.
587
00:34:52,719 --> 00:34:55,839
Go tell the banks that you've otherwise
guaranteed that they have to be in compliance
588
00:34:55,839 --> 00:34:58,800
with this executive order if they wanna
continue to work with the SBA.
589
00:34:58,960 --> 00:35:00,400
That's how an executive order works.
590
00:35:00,804 --> 00:35:04,324
Going a little bit further, let's talk about
the FTC because one of the things that was just
591
00:35:04,324 --> 00:35:07,125
called out was section five of the Federal
Trade Commission Act.
592
00:35:07,284 --> 00:35:12,565
This document here is a congressional research
service document that is designed to be given
593
00:35:12,565 --> 00:35:17,009
to congresspeople to inform them of what's
happening in various aspects of the law.
594
00:35:17,009 --> 00:35:19,570
This was done about the FTC in section five.
595
00:35:19,730 --> 00:35:23,889
It says in addition to enforcing several
specific laws, the agency enforces section five
596
00:35:23,889 --> 00:35:27,889
of the Federal Trade Commission Act against all
US persons, partnerships, and corporations
597
00:35:27,889 --> 00:35:29,009
subject to a few exceptions.
598
00:35:29,414 --> 00:35:34,215
Section five identifies two categories of acts
under FTC's enforcement authority, unfair or
599
00:35:34,215 --> 00:35:38,934
deceptive acts or practices in or affecting
commerce, and unfair methods of competition.
600
00:35:39,494 --> 00:35:44,130
The first of these provisions, frequently
referred to as the UDAP provision, provides the
601
00:35:44,130 --> 00:35:49,010
basis for many of the FTC's consumer protection
actions when the agency lacks more specific
602
00:35:49,010 --> 00:35:50,210
statutory authority.
603
00:35:50,530 --> 00:35:55,809
Section five does not, and this is important,
define unfair or deceptive acts or practices.
604
00:35:56,085 --> 00:36:00,804
So the Federal Trade Commission, recently, in
respect of non competition agreements in The
605
00:36:00,804 --> 00:36:06,324
United States, can go and say, we think that
this particular behavior of business in the
606
00:36:06,324 --> 00:36:08,804
country is unfair or deceptive.
607
00:36:08,969 --> 00:36:11,050
And then they can go and issue guidance on
that.
608
00:36:11,050 --> 00:36:14,809
They can even bring enforcement actions,
lawsuits against people they think violate
609
00:36:14,809 --> 00:36:15,609
their rules.
610
00:36:15,609 --> 00:36:19,369
The agency, as described here in this
congressional research service document, said
611
00:36:19,369 --> 00:36:21,449
they may issue policy statements or guidance.
612
00:36:21,614 --> 00:36:24,574
They may issue rules defining practices as
UDAPs.
613
00:36:24,815 --> 00:36:27,855
The agency may pursue enforcement actions, as I
just mentioned.
614
00:36:27,855 --> 00:36:32,414
But, again, importantly, when we're talking
about section five, although they will assert,
615
00:36:32,414 --> 00:36:36,960
as they did in November 2022, that they have
broad authority to name anything like
616
00:36:36,960 --> 00:36:42,079
noncompetition agreements as unfair or
deceptive, we will find as we look further in
617
00:36:42,079 --> 00:36:45,039
these stories that they run into trouble when
they do so.
618
00:36:45,039 --> 00:36:48,559
Federal court issues nationwide injunction
blocking FTC noncompete ban.
619
00:36:48,905 --> 00:36:50,905
And this is as of August 2024.
620
00:36:50,905 --> 00:36:54,184
This whole concept is still proceeding through
the courts.
621
00:36:54,184 --> 00:37:00,025
But as we saw earlier in virtual reality with
respect to Microsoft and Activision, the FTC or
622
00:37:00,025 --> 00:37:04,130
any other agency of The United States can say
you're in violation of the law, but they aren't
623
00:37:04,130 --> 00:37:05,569
the ones that finally get to decide that.
624
00:37:05,569 --> 00:37:06,929
That is the court system.
625
00:37:07,250 --> 00:37:15,474
And so when the executive goes and tells his
agencies, that they should consider whether or
626
00:37:15,474 --> 00:37:20,434
not a debanking action would violate section
five of the Federal Trade Commission Act, then
627
00:37:20,434 --> 00:37:25,235
they can make that determination, but they're
still not over the over the hump, out of the
628
00:37:25,235 --> 00:37:29,849
woods in terms of actually winning that case in
a court of law in The United States.
629
00:37:29,849 --> 00:37:35,130
So we're still many steps removed, many steps
attenuated from actually saying Visa and
630
00:37:35,130 --> 00:37:38,090
Mastercard, it's time to shake in your boots on
any of this.
631
00:37:38,250 --> 00:37:41,289
Within a hundred and eighty days of the date of
this order, the federal banking regulators
632
00:37:41,289 --> 00:37:45,585
shall review their current supervisory and
complaint data to identify any financial
633
00:37:45,585 --> 00:37:49,505
institution that is engaged in unlawful
debanking on the basis of religion.
634
00:37:49,585 --> 00:37:53,985
And then they'll find that if they are unable
to obtain compliance within the meaning of this
635
00:37:53,985 --> 00:37:58,219
specific act under The United States code, a
different law, they will refer the matter to
636
00:37:58,219 --> 00:38:00,539
the attorney general for appropriate civil
action.
637
00:38:01,420 --> 00:38:02,539
General provisions.
638
00:38:02,539 --> 00:38:06,380
The authority granted by law to an executive
department or agency has not otherwise been
639
00:38:06,380 --> 00:38:07,019
impaired.
640
00:38:07,019 --> 00:38:10,539
This order is not intended to and does not
create any right or benefit, substantive or
641
00:38:10,539 --> 00:38:14,645
procedural, enforceable at law or inequity by
any party against The United States.
642
00:38:14,724 --> 00:38:20,085
Meaning that if you feel like somebody isn't
doing what they're supposed to do, that a bank
643
00:38:20,085 --> 00:38:26,109
is not reporting properly exactly what things
they did that were illegal to the executive
644
00:38:26,109 --> 00:38:29,630
branch agencies that they are supposed to under
this executive order that you, as a person, a
645
00:38:29,630 --> 00:38:32,670
citizen of The United States, do not have the
right to sue over this.
646
00:38:32,670 --> 00:38:37,389
This has not created some kind of contractual
arrangement that can be breached by some party
647
00:38:37,389 --> 00:38:38,909
to this not doing what they're supposed to do.
648
00:38:39,184 --> 00:38:48,144
And then I highlighted at the end that as a bit
of a slam or stray towards the small business
649
00:38:48,144 --> 00:38:53,344
administration, the cost for publication of
this order shall be borne by them, the SBA.
650
00:38:53,744 --> 00:38:59,599
And so what we see here is an executive order
that is written as executive orders really must
651
00:38:59,599 --> 00:39:04,559
be, telling the agencies within the executive
branch how the executive, the president of The
652
00:39:04,559 --> 00:39:09,744
United States, would like the laws to be
enforced, but we don't actually see a lot of
653
00:39:09,744 --> 00:39:11,824
specifics around that enforcement.
654
00:39:11,824 --> 00:39:17,585
We see a lot of holes, a lot of loopholes by
which a financial institution on the first part
655
00:39:17,744 --> 00:39:23,105
and a regulator on the second part could avoid
doing much of anything under these particular
656
00:39:23,105 --> 00:39:23,425
rules.
657
00:39:23,739 --> 00:39:28,380
And so when people say that they're destroyed,
when people say that they're screwed, I just
658
00:39:28,380 --> 00:39:33,019
wanna caution folks from jumping in too heavily
on that particular side of the argument because
659
00:39:33,019 --> 00:39:38,065
there are a whole lot of reasons why if I were
the lawyer for Mastercard, sitting in the
660
00:39:38,065 --> 00:39:40,144
Mastercard boardroom, I would say, alright.
661
00:39:40,144 --> 00:39:41,344
We have to see how this plays out.
662
00:39:41,344 --> 00:39:45,425
There certainly isn't nothing that the federal
government is concerned about these things, but
663
00:39:45,425 --> 00:39:49,744
I would not be quaking in my boots, and I would
explain all of this to them that, look.
664
00:39:49,744 --> 00:39:54,440
Here is a point of weakness that the regulators
have to actually abide by what the president
665
00:39:54,440 --> 00:39:55,239
wants to do here.
666
00:39:55,239 --> 00:39:59,079
Here's a point of weakness that the financial
institutions actually have to believe that they
667
00:39:59,079 --> 00:40:01,400
violated something that they report to the
regulators.
668
00:40:01,400 --> 00:40:04,920
Here's a point of weakness that any of this
relates at all to what we're doing with respect
669
00:40:04,920 --> 00:40:08,085
to steam and itch insofar as we're not making
political statements.
670
00:40:08,085 --> 00:40:12,965
We're not trying to isolate the people that are
in favor of the right or MAGA or anything else.
671
00:40:12,965 --> 00:40:17,684
We're really just aimed directly at the porn
games that apparently offend us as an
672
00:40:17,684 --> 00:40:19,285
institution or otherwise.
673
00:40:19,364 --> 00:40:23,760
And so you're gonna have a hard case to make if
you wanna tell us that we can't otherwise say
674
00:40:23,760 --> 00:40:27,039
Steam, we don't wanna be in the business of
selling those games, and so we're not gonna
675
00:40:27,039 --> 00:40:28,480
payment process for you.
676
00:40:28,640 --> 00:40:33,599
So if you are concerned about this story, what
I would say is absolutely be concerned about
677
00:40:33,599 --> 00:40:34,079
this story.
678
00:40:34,079 --> 00:40:38,844
But remember that the executive orders are only
for the executive branch, that this order is
679
00:40:38,844 --> 00:40:45,405
not aimed at the game situation, and that the
vagueness and lack of laws on this make the
680
00:40:45,405 --> 00:40:48,639
effort as it stands at this moment in time a
weak one.
681
00:40:48,639 --> 00:40:50,639
Now there might be laws passed in the future.
682
00:40:50,639 --> 00:40:53,760
There might be something that makes this a
stronger effort by The US Federal Government.
683
00:40:53,760 --> 00:40:58,159
But as it stands right now, if I'm Mastercard,
if I'm Visa, I'm saying, alright.
684
00:40:58,159 --> 00:41:02,105
I will take that situation under advisement,
but I'm not super worried that my entire
685
00:41:02,105 --> 00:41:05,385
business model has been destroyed by the pen of
the executive order.
686
00:41:05,464 --> 00:41:07,304
And that's been VirtualGalley for today.
687
00:41:07,304 --> 00:41:12,025
If you enjoy this content, as I said, please do
consider supporting us on Patreon or through
688
00:41:12,025 --> 00:41:15,224
memberships and super chats on the channel,
telling your friends that we're having these
689
00:41:15,224 --> 00:41:19,940
conversations, or just leaving comments,
comments, and more comments to this type of
690
00:41:19,940 --> 00:41:23,460
video because that seems to be what YouTube
likes the most right now.
691
00:41:23,619 --> 00:41:27,460
And on that note, I will leave you on one last
comment from me, which is to say, as we've
692
00:41:27,460 --> 00:41:32,284
discussed earlier in this video series, one of
the reasons I am so against what Steam has done
693
00:41:32,284 --> 00:41:36,605
in this particular context is that they have in
fact negotiated with the terrorists, that
694
00:41:36,605 --> 00:41:40,764
Mastercard threatened to remove their ability
to payment process or Visa did or PayPal or
695
00:41:40,764 --> 00:41:42,364
whomever was actually behind the scenes on
this.
696
00:41:42,780 --> 00:41:43,980
Steam capitulated.
697
00:41:43,980 --> 00:41:48,780
And as I said in that very first video in this
series, capitulating to those demands, those
698
00:41:48,780 --> 00:41:52,860
terroristic demands, to prevent you from
selling what it is that you wanna sell to the
699
00:41:52,860 --> 00:41:56,284
buyers that wanna buy it that are otherwise
legal in the jurisdiction in which you're
700
00:41:56,284 --> 00:41:59,484
operating leads to more requests from more
terrorists.
701
00:41:59,644 --> 00:42:03,964
And this brings up a story that I've seen
recently that's, that Valve, the operators of
702
00:42:03,964 --> 00:42:08,980
Steam, says PayPal support is no longer
available in some regions due to those those
703
00:42:08,980 --> 00:42:10,739
content concerns that we have discussed.
704
00:42:10,739 --> 00:42:16,099
So this is why I get so frustrated as a
corporate lawyer with the Steams of the world
705
00:42:16,099 --> 00:42:20,594
even more than Itch because I don't think Itch
had quite the leverage that Steam did because
706
00:42:20,594 --> 00:42:21,875
this was always going to happen.
707
00:42:21,875 --> 00:42:22,994
This was always the next step.
708
00:42:22,994 --> 00:42:25,155
If you capitulate on these grounds, if you just
say, okay.
709
00:42:25,155 --> 00:42:25,715
Yes.
710
00:42:25,795 --> 00:42:29,235
This kind of broad based pressure is gonna
prevent us from selling what it is we would
711
00:42:29,235 --> 00:42:34,109
otherwise want to sell in our own market, then
you're gonna get more people asking more
712
00:42:34,109 --> 00:42:39,789
things, and there is no reasonable way to limit
what has happened in this story to only the
713
00:42:39,789 --> 00:42:44,510
things that you find bad and to only the things
that you would otherwise not wanna buy for
714
00:42:44,510 --> 00:42:44,829
yourself.
715
00:42:45,105 --> 00:42:47,664
That's what I'll leave you with for this
episode of virtual reality.
716
00:42:47,664 --> 00:42:49,344
I wish it were a happier note.
717
00:42:49,425 --> 00:42:52,945
I do think it's a good thing that the
government overall is looking at these issues
718
00:42:52,945 --> 00:42:56,545
and saying that's something that maybe we
should address, but an executive order
719
00:42:56,545 --> 00:42:59,264
basically never answers the question from a
legal point of view.
720
00:42:59,400 --> 00:43:03,400
And in this particular case, it even answers
less than it might otherwise do in other
721
00:43:03,400 --> 00:43:04,119
contexts.
722
00:43:04,119 --> 00:43:07,400
Thank you so much for being here with me, and I
will catch you on the next episode of virtual
723
00:43:07,400 --> 00:43:08,920
legality or otherwise.
724
00:43:11,639 --> 00:43:17,204
Virtual legality is a YouTube video series with
audio podcast versions presented as commentary
725
00:43:17,204 --> 00:43:20,325
and for education and entertainment purposes
only.
726
00:43:20,485 --> 00:43:24,885
It does not constitute legal advice and does
not create an attorney client relationship.
727
00:43:25,045 --> 00:43:29,740
If you have legal questions about the topics
discussed, please consult own legal counsel.