WEBVTT - 20260122_Hilary Allen_JS_v2 0:00:03.680 --> 0:00:07.080 I'm t T and I'm Zakiah, and this is Dope Labs. 0:00:11.360 --> 0:00:14.600 Welcome to Dope Labs, a weekly podcast that mixes hardcore 0:00:14.680 --> 0:00:17.639 science with pop culture and a healthy dose of friendship. 0:00:21.960 --> 0:00:24.040 We are in a world that is more and more 0:00:24.360 --> 0:00:27.600 and more online. I feel like I'm constantly online. I'm 0:00:27.640 --> 0:00:30.960 never offline. There you go, and I feel like our 0:00:31.000 --> 0:00:34.360 pockets and wallets are not exempt from that either. M 0:00:35.640 --> 0:00:38.760 this episode, we're diving into fintech. With the rise of 0:00:38.800 --> 0:00:42.519 AI and technology, there seems to be promises of banking 0:00:42.600 --> 0:00:47.280 and finances that are hyper personalized, instant, seamless, more secure, 0:00:47.720 --> 0:00:53.040 basically daft punk, harder, better, faster, stronger, organ manner manner. 0:00:58.640 --> 0:01:01.080 All right, let's jump into the rest ofation. What do 0:01:01.200 --> 0:01:04.319 we know? Okay, so we're not new to fintech, which 0:01:04.360 --> 0:01:07.360 is short for financial technology. We've talked about fintech in 0:01:07.400 --> 0:01:11.040 another lab, but we know that there's a little bit 0:01:11.160 --> 0:01:14.399 more to this. Yeah. Yeah, Fintech is a broad term 0:01:14.800 --> 0:01:18.560 and it encompasses various categories of apps and platforms. Some 0:01:18.600 --> 0:01:21.680 of them are for payments and transfers think PayPal and Vemo, 0:01:22.280 --> 0:01:26.640 investing in trading apps, sometimes even saving like Acorn, and Robinhood. 0:01:26.959 --> 0:01:30.320 There's banking and budgeting apps. I use Copilot, not Microsoft Copilot, 0:01:30.560 --> 0:01:33.920 you know, same name, but different tasks. Right. We also 0:01:33.959 --> 0:01:36.640 talked about by now pay later apps, so that's like 0:01:37.080 --> 0:01:41.440 Klarna and things like that. And there's also cryptocurrency, which 0:01:41.520 --> 0:01:44.840 we haven't talked about as much, but those platforms are included. 0:01:45.240 --> 0:01:48.680 And there are so many promises of fintech revolution with 0:01:48.800 --> 0:01:53.640 blockchain and decentralizing finance and how financial technology can improve 0:01:53.840 --> 0:01:57.680 access for people who are underbanked and underserved. But how 0:01:57.720 --> 0:01:59.840 does it all work? It just feels like words that 0:02:00.120 --> 0:02:02.400 and said, you know, how do we get to that point? 0:02:02.440 --> 0:02:05.080 Are we on the blockchain? All right? So what do 0:02:05.200 --> 0:02:09.080 we want to know? I think let's start with the 0:02:09.080 --> 0:02:11.359 history of this, because it just feels like one day 0:02:11.360 --> 0:02:14.480 we were all say authentech or it was just all around. 0:02:14.840 --> 0:02:17.560 Let me tell you that movie Dope that came out 0:02:17.680 --> 0:02:19.079 a while ago. That was the first time I ever 0:02:19.120 --> 0:02:22.560 heard of anything like crypto and I don't know what 0:02:22.600 --> 0:02:24.600 that is, but they were ahead of their time because 0:02:24.639 --> 0:02:28.080 it then it felt like in the pandemic, everybody had NFTs, 0:02:28.280 --> 0:02:32.760 everybody was trying to buy crypto or bitcoin or whatever, 0:02:32.840 --> 0:02:36.120 and I was like, what is going on? And it 0:02:36.200 --> 0:02:39.040 promised a lot, but did it deliver? I don't hear 0:02:39.080 --> 0:02:40.799 a lot of folks talking about it. It feels like the 0:02:40.840 --> 0:02:45.839 people who wan want big and early and early, right, 0:02:46.360 --> 0:02:50.239 But what does that mean for the future of fintech? 0:02:50.680 --> 0:02:54.480 And with us being on the precipice of a financial crisis, 0:02:54.600 --> 0:02:57.079 to many of us, it already feels like a financial crisis. 0:02:57.840 --> 0:03:01.000 What does that mean? Yeah, and with anything that has 0:03:01.040 --> 0:03:04.160 to do with money in this country, there are winners 0:03:04.200 --> 0:03:07.360 and losers, so to speak. So how does fintech help? 0:03:07.400 --> 0:03:09.760 But also how does it hurt? Yeah? I think these 0:03:09.800 --> 0:03:15.760 are great questions. Let's jump into the dissection. In today's lab, 0:03:15.880 --> 0:03:17.440 we have Hillary Allen. 0:03:17.880 --> 0:03:20.200 Hi, I'm Hillary Allen. I'm a law professor at the 0:03:20.240 --> 0:03:23.520 American University Washington College of Law and the author of 0:03:23.560 --> 0:03:26.919 Fintech Dystopia, which you can access online for free at 0:03:26.960 --> 0:03:29.079 fintech Dystopia dot com. 0:03:29.360 --> 0:03:32.840 I would love to have us kind of jumpstart and 0:03:33.120 --> 0:03:37.480 jump in at a very introductory level into fintech. Can 0:03:37.560 --> 0:03:41.480 you describe in plain language like what fintech is and 0:03:41.560 --> 0:03:44.160 kind of shine a light where folks may not really 0:03:44.280 --> 0:03:45.760 know they're using fintech. 0:03:46.200 --> 0:03:48.280 Honestly, it's going to be tricky to do because people 0:03:48.320 --> 0:03:51.000 don't use the term in the same way, right, right, 0:03:51.080 --> 0:03:54.040 So you know, obviously it's a combination of the words 0:03:54.040 --> 0:03:57.839 financial and technologies. So when we talk about fintech, we're 0:03:58.120 --> 0:04:02.880 usually talking about particular category of financial technologies that have 0:04:02.920 --> 0:04:05.640 been in use since the two thousand and eight financial crisis. 0:04:06.160 --> 0:04:10.080 They're usually using apps, there may be some AI involved, 0:04:10.200 --> 0:04:12.520 there may be some blockchain involved, So those are sort 0:04:12.560 --> 0:04:16.080 of the technologies that are being used. But it's really 0:04:16.200 --> 0:04:19.400 sort of more of a business model or marketing type 0:04:19.520 --> 0:04:25.560 description than a category of technology. So one person's fintech 0:04:25.640 --> 0:04:28.000 may very well not be someone else's fintech. 0:04:28.400 --> 0:04:31.080 You said something and I was like, please, finally someone 0:04:31.080 --> 0:04:33.600 who can answer my questions. Blockchain? 0:04:36.200 --> 0:04:38.359 You want me to You want me to explain blockchain 0:04:38.400 --> 0:04:38.600 to you? 0:04:38.720 --> 0:04:38.920 Yeah? 0:04:39.080 --> 0:04:42.640 Sure. What a blockchain really is is a database, right. 0:04:42.800 --> 0:04:45.960 We record asset ownership on it, and you perform transactions 0:04:45.960 --> 0:04:50.560 on it by moving asset from one person to another person. That's, frankly, 0:04:50.600 --> 0:04:54.279 how we process all financial transactions these days using databases. 0:04:54.760 --> 0:04:58.680 The thing that's a little different about a blockchain is 0:04:58.720 --> 0:05:02.359 that there aren't trusted, permissioned people who we are in 0:05:02.480 --> 0:05:05.680 charge of saying, yep, this person does have that asset already, 0:05:05.720 --> 0:05:08.520 I'm going to move it across for them instead. It's 0:05:08.520 --> 0:05:12.400 supposed to be that sort of anyone can theoretically can 0:05:12.520 --> 0:05:17.400 process the transaction, and that anyone can check to see 0:05:17.440 --> 0:05:20.720 if a person has the asset by looking at the blockchain, 0:05:20.760 --> 0:05:25.640 because they're publicly available. That has the potential to be abused. 0:05:25.960 --> 0:05:28.359 Right if you think about imagine anyone being able to 0:05:28.360 --> 0:05:30.440 move money in an out of your bank account. Right, so, 0:05:30.560 --> 0:05:35.080 need to have something in place to discourage bad actors 0:05:35.720 --> 0:05:40.120 from spending the same asset twice or stealing assets. And 0:05:40.160 --> 0:05:45.279 so what they have are these game theory based mechanisms 0:05:45.320 --> 0:05:48.040 things they get called proof of work proof of steak 0:05:48.760 --> 0:05:52.800 that are expensive essentially to participate in. And so you're 0:05:52.839 --> 0:05:57.440 discouraged from doing bad transactions because it's going to cost 0:05:57.480 --> 0:06:02.719 you something. So that's sort of the the logic behind these, 0:06:02.760 --> 0:06:07.200 but it's actually quite expensive to participate in these game 0:06:07.279 --> 0:06:10.400 theory based mechanisms for approving transactions. 0:06:10.960 --> 0:06:15.960 Okay, okay, So blockchain is an online record that folks 0:06:15.960 --> 0:06:19.720 can see and that a lot of computers can keep 0:06:19.800 --> 0:06:23.120 up a copy of and when new information gets added, 0:06:23.680 --> 0:06:30.080 it's hard and expensive to do fraud, okay without folks noticing. Okay, 0:06:30.360 --> 0:06:33.279 So that's what they say is the security. And so 0:06:33.440 --> 0:06:38.240 people use blockchain for things like cryptocurrency and tracking who 0:06:38.320 --> 0:06:41.400 owns something digitally like an NFT. You remember those NFTs 0:06:41.400 --> 0:06:43.600 with the monkeys in space and stuff like that. 0:06:43.960 --> 0:06:44.279 Yeah. 0:06:44.480 --> 0:06:48.599 So, and blockchains matter because it helps people agree on 0:06:48.880 --> 0:06:52.279 what happened without needing a company to be in charge 0:06:52.279 --> 0:06:57.000 of the records. So it's basically like how banks work 0:06:57.080 --> 0:07:00.679 for us and our money. Sounds like we remade a bank, 0:07:00.720 --> 0:07:02.400 but without regulations. I don't know. 0:07:03.080 --> 0:07:07.600 No, you literally just described the crypto industry. They remade 0:07:07.680 --> 0:07:11.440 everything that was already in finance, only without regulation. 0:07:12.160 --> 0:07:14.200 One of the things that stood out is you mentioned 0:07:14.720 --> 0:07:19.400 fintech as being this category of technologies and applications that 0:07:19.480 --> 0:07:22.080 came on the tail of the two thousand and eight 0:07:22.120 --> 0:07:25.680 financial crisis. Now people are not saying we're having a 0:07:25.680 --> 0:07:29.960 financial cris Well, some people are say I'm having one, 0:07:30.240 --> 0:07:35.160 but there are some people who are in denial. Yeah, 0:07:35.320 --> 0:07:37.680 But I feel like we're not always saying like we're 0:07:37.680 --> 0:07:39.520 in a financial crisis. It doesn't feel like the news 0:07:39.560 --> 0:07:41.800 is saying it the way it did in two thousand 0:07:41.800 --> 0:07:42.080 and eight. 0:07:42.520 --> 0:07:45.800 We're not in a financial crisis yet, like we're in 0:07:45.800 --> 0:07:47.640 two thousand and eight. I think we're on the brink 0:07:47.640 --> 0:07:49.880 of one. But I think the point you're making is 0:07:50.040 --> 0:07:53.679 really important point, which is that it's been a long 0:07:53.800 --> 0:07:57.960 time since sort of the economy doing well meant that 0:07:58.440 --> 0:08:02.160 everyday people were doing well. Right. Economic inequality has been 0:08:02.200 --> 0:08:05.920 widening for decades, and we're now at the point where 0:08:06.640 --> 0:08:11.840 you know, people working full time are often just scraping by. 0:08:12.080 --> 0:08:14.960 We're going to focus on making the economy good for people. 0:08:15.560 --> 0:08:21.360 And now even a good economy doesn't help half the population, right, 0:08:21.440 --> 0:08:23.960 So even in a good economy, a lot of people 0:08:23.960 --> 0:08:27.640 are struggling. The sad news is that I think we're 0:08:27.640 --> 0:08:30.080 on the brink of another financial crisis. So we're now, 0:08:30.560 --> 0:08:33.240 I think, on the brink of a bad economy, which 0:08:33.360 --> 0:08:36.760 is going to be problematic for those who were already 0:08:36.800 --> 0:08:38.400 struggling and others. 0:08:39.280 --> 0:08:41.280 Well, what does fintech get right? 0:08:41.960 --> 0:08:45.000 It's funny because I criticize fintech a lot, and people 0:08:45.040 --> 0:08:47.720 assumes then that I'm like playing defense for the banks 0:08:47.720 --> 0:08:50.280 and saying that everything was perfect with the banks, which 0:08:50.760 --> 0:08:53.559 is not the case. I've been criticizing banks for longer 0:08:53.600 --> 0:08:57.079 than I've been criticizing anything else. And one thing fintech 0:08:57.720 --> 0:08:59.880 has done reasonably well, I think is, you know, I 0:09:00.000 --> 0:09:02.680 identify a lot of the pain points right that people 0:09:02.880 --> 0:09:07.800 were excluded from financial services, were excluded from opportunities, et cetera. 0:09:07.840 --> 0:09:09.880 And so a lot of the people in the fintech 0:09:09.920 --> 0:09:12.680 industry sort of say the right things because they've identified 0:09:12.679 --> 0:09:15.640 the right problems, but they don't have solutions to those problems, 0:09:15.679 --> 0:09:18.160 because if you think of what the problems are at 0:09:18.160 --> 0:09:22.160 a metal level, there this economic precarity we're just talking about, 0:09:22.600 --> 0:09:27.280 and when people are barely getting buy you're not going 0:09:27.320 --> 0:09:32.360 to solve that by giving them investment opportunities because people 0:09:32.600 --> 0:09:35.720 don't have enough money to invest, you know. And then 0:09:35.760 --> 0:09:38.559 what we see is that the investment opportunities that are 0:09:38.559 --> 0:09:40.880 being pushed on people who have very little to invest 0:09:40.920 --> 0:09:44.240 look an awful lot like gambling. I'm talking about crypto, 0:09:44.320 --> 0:09:47.400 I'm talking about some of these stock trading options apps, 0:09:47.559 --> 0:09:49.640 and so this is money people can't afford to lose. 0:09:50.280 --> 0:09:53.920 Another way when we're trying to solve economic pricarity with 0:09:54.120 --> 0:09:56.839 financial services is to say well, people need to be 0:09:56.880 --> 0:09:59.600 able to borrow more. So now we're talking about buy now, 0:09:59.600 --> 0:10:03.360 payof later, we're talking about earned wage access programs, we're 0:10:03.360 --> 0:10:06.800 talking about fintech lending platforms that sometimes look just like 0:10:06.840 --> 0:10:09.560 payday lending, only they have a fancy or app right, 0:10:10.360 --> 0:10:14.800 and financial services are in those circumstances are most likely 0:10:14.920 --> 0:10:18.480 to be predatory and exploitative because they can't really respond 0:10:19.240 --> 0:10:21.959 to the economic procarity, which we need to get at 0:10:22.000 --> 0:10:26.320 with increasing the minimum wage, increasing social security benefits, bringing 0:10:26.360 --> 0:10:29.240 down healthcare costs like that, that's what needs to be solved. 0:10:29.320 --> 0:10:47.520 There. What other types of financial services problems do we 0:10:47.600 --> 0:10:50.000 see in the US that we really need to address. 0:10:50.200 --> 0:10:51.760 So we have a lot of people in this country 0:10:51.800 --> 0:10:54.800 who are unbanked, they don't have access to banking services, 0:10:54.800 --> 0:10:58.040 and we've seen a lot of neo banks, fintech banks 0:10:58.120 --> 0:11:02.640 try and fill that voice. But what they don't come 0:11:02.679 --> 0:11:06.079 out and say is that you don't get deposit insurance 0:11:06.720 --> 0:11:11.719 with those neo banks, those fintech banks. They may have 0:11:11.800 --> 0:11:14.520 some arrangement with a bank where it's sometimes covered depending 0:11:14.559 --> 0:11:17.199 where your money sits, but if you're forfeiting some consumer 0:11:17.240 --> 0:11:23.559 protections when you're using those instead of an ensured regulated bank. 0:11:23.600 --> 0:11:26.120 Because when a bank is insured, that means if anything happens, 0:11:26.160 --> 0:11:28.000 they have to give you your money. Yeah, and so 0:11:28.240 --> 0:11:32.320 check your account details. Also if you go to the teller, 0:11:32.559 --> 0:11:34.960 if anybody's still driving to the bank, if you go 0:11:35.040 --> 0:11:38.000 to the teller, on the window, you'll see FDIC and 0:11:38.400 --> 0:11:40.720 the Federal I think the minimum amount is like two 0:11:40.840 --> 0:11:43.440 hundred and fifty thousand dollars per account. That's how much 0:11:43.480 --> 0:11:44.280 they will ensure. 0:11:44.960 --> 0:11:47.440 So there are plenty of countries around the world that 0:11:47.600 --> 0:11:50.520 just pass laws saying, guess what banks you need to 0:11:50.800 --> 0:11:54.680 offer extremely low cost or no cost bank account everybody. 0:11:55.000 --> 0:11:59.040 And that is I think the real solution to limited 0:11:59.040 --> 0:12:03.240 access to financial services, not these sort of alternatives that 0:12:03.920 --> 0:12:06.559 don't protect your funds the same way banks to it. 0:12:07.040 --> 0:12:09.480 I think that's such a great point about the folks 0:12:09.520 --> 0:12:14.560 who are unbanked and underbanked. The FDIC said that fourteen 0:12:14.600 --> 0:12:18.440 point two percent of households are underbanked, so that had 0:12:18.480 --> 0:12:22.640 bank accounts but used non bank services, just like you 0:12:22.679 --> 0:12:25.480 were talking about. And when we then dig a little 0:12:25.520 --> 0:12:28.920 bit deeper into the demographics of folks that are most 0:12:29.080 --> 0:12:33.160 likely to be unbanked or underbanked, we see that there's 0:12:33.160 --> 0:12:36.400 a racial disparity there as well, and so there's cascading 0:12:36.440 --> 0:12:39.559 effects and there's compounding effects because of that. 0:12:39.960 --> 0:12:43.120 For sure, the users of fintech services, many of these 0:12:43.120 --> 0:12:47.240 fintech services are disproportionately black and Hispanic, and as I said, 0:12:47.480 --> 0:12:50.640 there are often fewer consumer protections than if you're using 0:12:50.720 --> 0:12:55.120 more traditional financial services. I want to point out something 0:12:55.120 --> 0:12:57.719 because it's really important. You mentioned unbanked and underbanked, and 0:12:57.760 --> 0:13:01.200 they're two very different problems. Right, So if you're unbanked, 0:13:01.240 --> 0:13:02.960 you don't have a bank account at all. It's very 0:13:03.000 --> 0:13:05.720 expensive to be unbanked. You've got to use check cashing 0:13:05.800 --> 0:13:10.280 services for everything, etc. So that kind of problem is 0:13:10.320 --> 0:13:14.240 solved by the solution I mentioned just before about giving 0:13:14.280 --> 0:13:18.640 everybody a bank account. Under banked, now we're getting more 0:13:18.760 --> 0:13:21.520 the economic precarity problems, because these are people that have 0:13:21.679 --> 0:13:25.560 access to financial services but simply don't have enough money 0:13:25.559 --> 0:13:28.440 to make ends meet. Right they can't wait a couple 0:13:28.480 --> 0:13:31.240 of days for their paycheck to clear. That is something 0:13:31.240 --> 0:13:33.480 we could actually fix by law, by the way, Congress 0:13:33.520 --> 0:13:35.240 could just say paychecks clear quicker. 0:13:36.640 --> 0:13:37.319 Wow. 0:13:37.440 --> 0:13:39.280 It's not a tech problem at all. So much of 0:13:39.320 --> 0:13:43.520 this is political economy. We should fix that, but also 0:13:44.080 --> 0:13:47.200 we shouldn't have half the country so desperate that they 0:13:47.360 --> 0:13:49.360 can't get buy for a few days until they're check 0:13:49.400 --> 0:13:52.400 clears right, right, So a lot of the underbank stuff 0:13:52.440 --> 0:13:56.640 really ties to this economic precarity, and financial services products 0:13:56.920 --> 0:13:59.839 can't really fix that problem. They can serve as a 0:13:59.880 --> 0:14:02.920 bit of a band aid, but sometimes that band aid 0:14:03.400 --> 0:14:07.040 lessens the pressure to actually fix the problem. And also 0:14:07.240 --> 0:14:10.360 that band aid can also be quite exploitative lucrative for 0:14:10.440 --> 0:14:14.240 the providers, while at the same time, myers the people 0:14:14.280 --> 0:14:17.160 who need those services even more in debt or they 0:14:17.200 --> 0:14:20.440 lose money gambling essentially, and then they're in a worse 0:14:20.520 --> 0:14:21.680 position than they were before. 0:14:22.760 --> 0:14:26.600 So I think I use traditional banking services. That's what 0:14:26.680 --> 0:14:28.800 I grew up on. I mean, my mom gave me 0:14:28.840 --> 0:14:31.760 a fake check book at a very early age and 0:14:31.920 --> 0:14:33.840 was like, you have to balance this, and I was 0:14:34.360 --> 0:14:37.120 writing my grandmother checks for dinner, like thank you for dinner. 0:14:37.200 --> 0:14:41.320 I love here you go unlimited deposits though it was 0:14:41.320 --> 0:14:45.520 not insured either. But when I think about that, and 0:14:45.560 --> 0:14:47.360 I think about some of the things that I've used 0:14:47.360 --> 0:14:50.800 for convenience, like not check cashing services, but things where 0:14:50.840 --> 0:14:54.560 you like even in starting a business, things that feel frictionless. 0:14:54.560 --> 0:14:56.480 I think part of the traditional banking system is it 0:14:56.480 --> 0:14:58.920 feels like there's so much friction, like you have to 0:14:58.960 --> 0:15:01.400 have these many differ types of forms of ID to 0:15:01.600 --> 0:15:04.520 open an account and an address that matches your on 0:15:04.640 --> 0:15:07.840 your license, it has to match your bills or whatever. 0:15:07.880 --> 0:15:09.640 So when you're moving and things like that, it becomes 0:15:09.720 --> 0:15:12.760 very difficult when things feel frictionless like this, like you 0:15:13.040 --> 0:15:16.920 are the cost that's being paid, Like your information, your 0:15:17.040 --> 0:15:19.280 data that becomes the cost. Is that the same way 0:15:19.320 --> 0:15:19.960 for fintech. 0:15:20.600 --> 0:15:22.400 I think it's always true. When you're not paying for 0:15:22.440 --> 0:15:26.200 the product, you are the product. And payments data is 0:15:26.280 --> 0:15:29.280 so valuable to these companies because think about it, when 0:15:29.280 --> 0:15:31.960 you post something on social media, you're showing the world 0:15:31.960 --> 0:15:34.560 what you want them to see. When you're actually buying stuff, 0:15:35.000 --> 0:15:37.840 that's what you really care about, right, So payments data 0:15:38.040 --> 0:15:42.440 is very very juicy and very very valuable. I want 0:15:42.480 --> 0:15:45.200 to come back to this point about frictions and so 0:15:45.440 --> 0:15:48.320 much of what we see in tech, and I'm not 0:15:48.360 --> 0:15:50.280 just talking about finance here, and like tech in general, 0:15:50.360 --> 0:15:54.560 it's all about making things simpler, easier, reducing frictions and 0:15:54.560 --> 0:15:58.200 stuff but and this alludes to something you just said, like, 0:15:58.600 --> 0:16:02.160 not all circumstances are the same, right when you know, 0:16:02.440 --> 0:16:04.640 we always hear like make money as easy as sending 0:16:04.640 --> 0:16:07.880 an email or a photograph. Well, if your email or 0:16:07.880 --> 0:16:11.080 your photo never gets there, too bad, so sad. Right 0:16:11.560 --> 0:16:14.560 if your money disappears, that's a much bigger deal. Yes, 0:16:14.720 --> 0:16:17.600 So sometimes when the stakes are high, there are some 0:16:17.640 --> 0:16:20.480 frictions for a reason, which doesn't mean they all should 0:16:20.520 --> 0:16:22.240 be there, and we should definitely think about which ones 0:16:22.240 --> 0:16:24.000 we should eliminate. I'm not saying we should just stick 0:16:24.000 --> 0:16:28.520 with the status quo. But convenience comes at a cost, right, 0:16:28.760 --> 0:16:33.720 and sometimes having some inconvenience can be worthwhile when the 0:16:33.720 --> 0:16:38.320 steaks are really really hot. Sometimes investing in sort of 0:16:38.360 --> 0:16:42.440 the boring aspects of like just making sure your stuff 0:16:42.480 --> 0:16:44.640 is in a bank and someone is keeping an eye 0:16:44.640 --> 0:16:46.720 on it is worth it. I mean, even if you 0:16:46.760 --> 0:16:49.240 have like a PayPal account or a Venmo account, if 0:16:49.280 --> 0:16:52.560 you keep your money in a wallet, but then it's 0:16:53.120 --> 0:16:56.280 it's not insured, it's just part of their assets. If 0:16:56.280 --> 0:16:59.400 they were to go bankrupt, that stops being You become 0:16:59.400 --> 0:17:02.760 an unsecure creditor and you wait years for their bankruptcy 0:17:02.840 --> 0:17:05.639 to go through. So as much as it can be 0:17:05.680 --> 0:17:09.240 a little inconvenient and boring, like, I highly recommend keeping 0:17:09.280 --> 0:17:11.560 your money in an FDIC inshored bank. 0:17:11.880 --> 0:17:14.000 There are a few things that popped out to me, 0:17:14.400 --> 0:17:18.120 and one of them was regulations and Congress and how 0:17:18.119 --> 0:17:20.959 they play a role in this. When you think about 0:17:21.480 --> 0:17:27.000 moments in US financial history, like the post two thousand 0:17:27.000 --> 0:17:29.640 and eight Dodd Frank era and things like that, what 0:17:29.760 --> 0:17:33.080 patterns do you see with regulators and what does that 0:17:33.160 --> 0:17:36.600 history tell us about the future as fintech continues to evolve. 0:17:37.680 --> 0:17:40.240 Yeah, it's a great question, And if you don't mind, 0:17:40.280 --> 0:17:42.360 I'm going to go a little further back than two 0:17:42.359 --> 0:17:44.040 thousand and I'm going to go back to the nineteen 0:17:44.080 --> 0:17:48.040 twenties because I think that's the analog for our moment now. So, 0:17:48.600 --> 0:17:52.760 you know, the Roaring twenties, there was huge wealth inequality. 0:17:53.040 --> 0:17:56.000 People were buying stocks and bonds left, right and center, 0:17:56.040 --> 0:17:59.399 from door to door salesmen. They often had nothing behind them. 0:18:00.000 --> 0:18:02.240 People this is people would talk about it over their 0:18:02.280 --> 0:18:06.720 fences of parties, et cetera. And then there's not really 0:18:06.800 --> 0:18:10.600 much regulation around that, and then we have a giant 0:18:10.640 --> 0:18:13.800 stock market crash in nineteen twenty nine. That precipitates a 0:18:13.840 --> 0:18:17.160 banking crisis where banks start failing left, right, and center. 0:18:17.240 --> 0:18:19.960 There's not deposit insurance yet, and we end up with 0:18:20.000 --> 0:18:22.800 the Great Depression. And so the response to that was 0:18:22.800 --> 0:18:25.439 to put in place what has become the sort of 0:18:25.480 --> 0:18:31.520 the backbone of our financial regulatory infrastructure, deposit insurance, banking regulations, 0:18:31.680 --> 0:18:36.920 splitting banks that sort of do classic banking business from 0:18:36.960 --> 0:18:40.800 investment banks. We get the securities laws, which basically say, 0:18:40.800 --> 0:18:43.719 if you want to sell stocks and bonds to the public, 0:18:43.800 --> 0:18:46.760 you've got to make disclosures and you've got to register 0:18:46.880 --> 0:18:49.679 with the sec Things start to unravel a little bit 0:18:49.680 --> 0:18:52.959 in the nineteen seventies and the nineteen eighties. In nineteen 0:18:53.040 --> 0:18:59.240 ninety nine they allow for investment banks and commercial banks 0:18:59.240 --> 0:19:03.840 to come back together again. We get laws that say, oh, 0:19:03.880 --> 0:19:07.360 you're not allowed to regulate certain financial products like derivatives, 0:19:07.400 --> 0:19:11.560 because that's we don't want to hurt innovation. They keep 0:19:11.600 --> 0:19:15.280 saying that. Then starts spiraling out of the control, and 0:19:15.280 --> 0:19:19.040 then we have a financial crisis. In two thousand and eight. 0:19:19.560 --> 0:19:22.119 Some things TT and I've been talking about for our 0:19:22.320 --> 0:19:25.439 listeners about gambling and like how it seems to be 0:19:25.560 --> 0:19:28.440 little micro gambling everywhere and the like. Were they doing 0:19:28.440 --> 0:19:31.560 that in the nineteen twenty two Yes see. 0:19:31.280 --> 0:19:33.320 There was a really interesting article that came out, like 0:19:33.680 --> 0:19:35.960 I think in twenty twenty one in the Atlantic about 0:19:36.000 --> 0:19:41.320 America's gambling addection metastasizing, and they said that basically, in 0:19:41.400 --> 0:19:45.880 times of uncertainty and precarity, you always see more gambling. 0:19:45.960 --> 0:19:49.680 So like around the French Revolution, everybody was gambling. It's 0:19:49.880 --> 0:19:52.320 just you know, it's it's something that happens. 0:19:52.359 --> 0:19:54.440 Why didn't they teach us that in the history books? 0:19:55.560 --> 0:19:56.399 That's a good question. 0:20:10.200 --> 0:20:14.040 I just am thinking about how it feels like we're 0:20:14.040 --> 0:20:19.280 always behind the technology. We're always behind and protecting the people, 0:20:19.720 --> 0:20:22.359 And I don't know how we change that because that 0:20:22.359 --> 0:20:25.000 doesn't feel limited to finance. It feels like that for 0:20:25.240 --> 0:20:26.879 it feels like that for space travel, it feels like 0:20:26.880 --> 0:20:29.240 that for everything, environmental pollution. 0:20:29.000 --> 0:20:32.560 AI And the answer is it's nothing to do with 0:20:32.600 --> 0:20:35.399 the technology, right, So the technology would have you believe 0:20:35.480 --> 0:20:38.560 that the law can't keep up with the technology law totally? 0:20:38.600 --> 0:20:41.520 Can you just have broad functional laws and you enforce 0:20:41.560 --> 0:20:43.840 it as new things evolve? You know your reason by 0:20:43.880 --> 0:20:49.520 analogy law totally can keep up with developments, but the 0:20:49.600 --> 0:20:53.640 money doesn't want it to. And that is the issue, right. 0:20:53.640 --> 0:20:56.080 It's not that the law can't keep up with technology, 0:20:56.080 --> 0:20:59.159 it's that those who are developing the technology have a 0:20:59.280 --> 0:21:03.159 very vested interest in making the law seem obsolete. And 0:21:03.240 --> 0:21:06.400 money talks. So you know, the answer to your question 0:21:07.080 --> 0:21:10.120 is really a political economy story, which is like, how 0:21:10.160 --> 0:21:14.200 the hell do we get regulatory apparatus that actually focuses 0:21:14.359 --> 0:21:20.399 on protecting people from harm and doesn't just favor the 0:21:20.440 --> 0:21:26.760 interests of the wealthy who are pushing this stuff. One 0:21:26.800 --> 0:21:29.040 of the sort of things I talk about a lot 0:21:29.160 --> 0:21:32.359 in this fintech dystopia book that I published is the 0:21:32.400 --> 0:21:36.320 importance to laugh at the wealthy, the importance to laugh 0:21:36.480 --> 0:21:39.960 at when we're told stories about all this stuff that 0:21:40.080 --> 0:21:42.800 technology is going to do, and how amazing it's going 0:21:42.880 --> 0:21:45.840 to be with the space travel and the AI, and 0:21:45.880 --> 0:21:49.159 how we can't possibly rein it in because you know, 0:21:49.280 --> 0:21:52.119 we'll be shooting ourselves in the foot. We need to 0:21:52.359 --> 0:21:56.880 collectively laugh at that a little because the people who 0:21:56.920 --> 0:22:00.439 are saying this often, to be clear, aren't even grounded 0:22:00.480 --> 0:22:04.359 to the technology. They're people that developed an app or 0:22:04.400 --> 0:22:08.159 a browser, twenty years ago, made a ton of money 0:22:08.760 --> 0:22:11.760 and now think they know everything about everything. We've got 0:22:11.840 --> 0:22:14.120 Elon Musk telling us that we're just going to terraform 0:22:14.200 --> 0:22:17.480 Mars and move there and then get people who actually 0:22:17.520 --> 0:22:20.960 know anything about it. They're like, yeah, no, that's not 0:22:21.000 --> 0:22:24.520 going to happen. But we have to listen to these 0:22:24.560 --> 0:22:26.600 people because they have such all out and megaphone, because 0:22:26.640 --> 0:22:29.479 they have so much money. So I hope we can 0:22:29.480 --> 0:22:30.760 at least laugh at them a little bit. 0:22:31.920 --> 0:22:35.479 So that leads to my next question is, as the 0:22:35.520 --> 0:22:41.800 citizens of this country, how do we prepare ourselves for 0:22:42.760 --> 0:22:47.199 what is possible to come? And how do we hold 0:22:47.400 --> 0:22:52.320 our elected officials accountable? What should we be asking for? 0:22:52.440 --> 0:22:56.320 What should we be saying is needed in order to 0:22:56.359 --> 0:22:58.359 protect ourselves the common people? 0:22:59.480 --> 0:23:01.920 One thing, and this is very niche, but I actually 0:23:01.960 --> 0:23:05.160 think it's really worth looking at. So the crypto industry 0:23:05.200 --> 0:23:08.480 has been very aggressive in their political spending. In the 0:23:08.480 --> 0:23:12.480 twenty twenty four election cycle, Over half the corporate pack 0:23:12.560 --> 0:23:15.400 money spent was spent by the crypto industry. So think 0:23:15.400 --> 0:23:18.280 about that. You know there's pharma whatever, half of it 0:23:18.400 --> 0:23:18.920 was crypto. 0:23:19.520 --> 0:23:22.640 That's a lot of money to be spent. So when 0:23:22.680 --> 0:23:25.960 you think about packs, and when you hear the term pack, 0:23:26.000 --> 0:23:28.400