Hello, and welcome to another episode of the All Thoughts Podcast. I'm Tracy Alloway and I'm Joe. Why isn't thal so Joe.
We've had a busy few months.
Yeah, we really did. We were all over We crisscrossed the country. We did all three coast East Coast California, the third coast Texas. We went to California twice. Yep, in about three weeks, I think. But we have a nice little break now.
Yes, I for one am grateful to not be living out of a suitcase for a while. But our last stop in the Whirlwind America tour was in Las Vegas.
That was so fun. I loved going to Vegas. I really loved you. I love Vegas. It was so cool that I got the opportunity to join you in Las Vegas.
Okay, listeners, this is where we're going to get into a little bit of an argument.
But you're going to We're going to hear Odd Lot's co host air some dirty laundry.
The day before, No, the day he was supposed to actually fly out to Las Vegas, Joe changed his mind. You decided Vegas isn't for.
You, So, listeners, I love Vegas. It's one of my favorite cities in the country. I like playing poker, I love the strip, I love the lights, I love the water consumption in the desert. I was really excited. And then I got to the airport on this really.
Nice He wasn't feeling it.
No, it's not true. I got to the airport on this really nice fall day, and about thirty minutes after I got to the airport, my flight was pushed back about five hours. And I was only going to be in Vegas for twenty four hours as it was. And I wasn't even sure that the flight was going to take off when they said because actually who was the second delay at the time. And I did have family in town, which is also true, and Terracy was already out there, and Racy is a very capable co host,
more than capable co host. Like a lot of excuse Joe, and I said, please, Tracy, can you just do this? Can you just do me a solid and do this episode by yourself and Tracy without any complaint or frustration.
Well, at the time, I didn't complain.
I complained when I came.
No making me feel bad about myself obliged.
Let me just say the world's smallest microscope would not be able to locate my sympathy for this argument. You know what, No, Okay, let's leave it there. I just never okay, listeners, let me say though, that you are in for a treat, as is Joe, because he wasn't there, so this is the first time he's going to hear this interview. But we spoke, or I spoke with Michael Sue, the Acting Comptroller of the Currency, and we had a
really interesting conversation. This was a live episode recorded on stage at Money twenty twenty, which you might know as the big sort of fintech gathering, and we talked a lot about the intersection between banking and technology and Joe. Here's where it gets kind of odd, lotsy. Michael has been arguing for a while that a lot of what's happening in banking right now, and particularly in payments, kind
of looks like a supply chain. So a lot of banks are outsourcing different functions like payments to third party vendors, and this presents a bunch of new and interesting problems and risks and I guess also opportunities.
It's so interesting to think about finance in this realm, and you can imagine how these things go in cycles, because you could imagine at some point these functions were very simple. It was all in how it's vertically horizontally integrated and so forth. And then, like many other areas of the economy, companies realized, okay, wait, what if we have one specialty. Other companies then specialize in this specific thing.
I remember we did that episode about community banks and how they had to outsource a lot of their own functions about cybersecurity and so forth because they don't have maybe the capacity of a JP Morgan. So it is interesting to think about, like the supply chain of money in that.
Rest Well, this is exactly it. So in one respect, it's a sort of natural evolution of the economy. Everyone becomes more specialized, everyone becomes more efficient, the business model becomes more streamlined. But as Michael points out, there are these sort of new problems that are potentially thrown up by everyone outsourcing kind of critical functions in some respects. So, without further ado, take a listen to this live episode with Michael Sue recorded in Las Vegas, Sans Joe at
Money twenty twenty. Michael Sue, acting Controller of the OCC. Thank you so much for coming on on.
Lots, Tracy, thanks so much for having me. Love the show and it's through all honor to be here.
Oh, I appreciate that. So I'm sort of in a reflective mood lately. And I used to be a banking correspondent. I covered a lot of fintech back when people were super excited about it. I feel like they're not as excited about it anymore. This is a really embarrassing. First question, what is the OCC do and like, how does it compare? I feel like there are so many different banking regularly.
How much time do we have?
Yeah, well, there's the FDIC, there's the FED, there's the OCC. Who's doing what? How often do you step on each other's toes?
We coordinate a lot, let me put it that way. So the OCC regulates and supervises nationally chartered banks and federal savings associations. So, just to put some numbers on that, it's about eleven hundred banks. Wow, Okay, now we've got forty. We got over four thousand banks in the banking system, but by assets, the largest banks tend to be nationally chartered. You know your your JP Morgan chases and your cities in the world. So by assets, the occ supervises and
regulates about two thirds of the banking assets. Oh, got it in the system, right, So you get a little bit of that eighty twenty year rule for nationally charter banks. Banks can have state charters, and they can be members or not members of the Federal Reserves. So we have a complicated Actually your listeners might be interested in this, but maybe we'll spare them for there.
Our listeners love detail.
So there's a different kind of landscape. But we coordinate quite a bit at the federal level on all the major rulemakings because we want a level system. We want a level banking system. Now, I think it was really interesting about the occ IS historically. So we were founded in eighteen sixty three during the Civil War. Wow, and before the OCC you had free banking. And this is relevant for stable coins because that system. But they all
issued their own currency, yes, I remember this. So you had the Bank of Tracy, and you had the Bank of Mike and the Bank of Joe, and each bank would issue its own dollar, different size, different color, but
it would be a dollar. And so people are walking around with all these different notes and in theory they could go back to the Bank of Tracy and say, I want a dollar's worth of gold right specie, And sometimes you had it and sometimes you didn't, and so there would be discount rates on these dollars, and so it was a mess. And you imagine like there's panics all the time. There's a lot of fraud, and there
were money men. People would walk go around with bags full of money from town to town to exchange these dollars because you know, if you're a farmer, you want to be able to do your business. So during the Civil War, Sam and Chase is like, hey, we got to fund the war and we got to bring the union together. So they've got they passed a series of laws.
They've got now a green back, unified dollar, and they create national banks to basically both issue those and then take deposits and basically buy treasury bonds which funds the war.
That's crazy.
So the occ was around even before the fest yes, way before.
So you have one up on them so well, and.
All we do is supervision. It's a we are a very supervisory focused agency. And so we've got a long deep history and you know, the stable coin debates. You know, this is less relevant now, but a lot of times folks were saying, well, why don't we want more? Don't we want stable coins? And it's like the stable coin landscape now looks a lot like free banking because each
of these issuers is different and they try differently. I mean, if you go on the and you look these things up and it's not a long term sustainable system.
Well, since we're on the topic of stable coins, as our Bloomberg opinion columnist Matt Levine says, often it does seem like a lot of crypto and maybe some aspects of fintech are learning the lessons of the financial system development sort of in real time. And on the topic of stable coins, you know, we did have a big collapse last.
Year with Tara Luna.
You at the OCC have always taken a sort of cautious approach to stable coins. What was it that kind of worried you about their development? What was it that you saw that made you think, wait a second? And in some respects it's kind of surprising because stable coins were supposed to be the safest aspect of the crypto system and then turned out to be very problematic. Although I guess you can say that about a lot of financial history. The safest assets often turn out to be
the problematic ones. But yes, what was it that made you take that cautious approach?
So if we back up a little bit and you know, just the rise of crypto. So I became Acting Comptroller in May of twenty twenty one, and that year alone, crypto was just on a.
That was a big that was a big year of growth for.
Crypto in general and stable coins, and so there's a lot of hype, a lot of fomo, and it felt familiar to me because it felt a lot like derivatives and structured finance circa two thousand and four to two thousand and six.
Right, you pool all this stuff and then you trade it as well, one for one.
And so there's Julian Ted got this great book, Fools Gold, and I recommend it to everybody because chapter one innovation, Chapter two, perversion, Chapter three crisis, and so this cycle happens over. The first innovations for credit to fault swaps were really really good. They solved problems, it was amazing, it's great, and then people are just innovating for innovation's sake,
and then you have the high priests who understands this. Oh, only the p HD with you know, who understand you know, nuclear physics can actually explain the stuff, and that leads to it creates an environment where it can just kind of eat itself. And so I had a feeling within crypto maybe that's what's happening. And so of course I think we do what we do best in government. We dig in, what are the facts, let's like crack the thing open and try to understand this best we can.
And the more we looked, the more worrying signs of like, hmm, this is not all it's cracked up to be. And especially with stable coins, there was a big gap between the talk and the reality, and so that just sets a whole bunch of flags up. And so, yeah, you're trying to telegraph very clearly to banks like, look, if you're going to get into crypto, it's got to be safe, sound and fair. Do your homework, you know, make sure
you have those controls in place. And so for the banks that were, you know, like I call them crypto curious, and there were a lot at the time, they lost interest because I think they recognized, oh that that takes an awful lot of work, and then once the crypto winter happened, you know, a lot of that, there was a big pull.
Back from that, right Well, the one other thing I want to ask is stable coins aside. You know, we did see a little bit of contagion from the crypto turmoil of twenty twenty two into the banking system. So notably we saw Silvergate collapse, and I guess we can debate how much of that was due to pure crypto or other dynamics with deposit outflows and things like that.
But does it feel to you looking at the US banking landscape now in twenty twenty three, that there's enough of a barrier between regulated banks and crypto, there's enough of a sort of insulation there.
So I'm going to knock on I'm not sure if this would I'm want to knock on it.
Our producer Carmen's going to kill you for making ambient noise during the podcast.
The short answer is, I think so. And that's in part because across all the federal banking agencies, we've been very clear and unified about how we feel and what our expectations are about banks engaging in risky activities such as crypto those risks out, you provide an interagency guidance. Again, it's not to say that banks can't do it, but if a bank is going to do it, whatever it is, it's got to be safe, sound, and fair, and they have to prove that to us. We feel that that's
very appropriate given what's taking place in the crypto space. Again, if you go back, I think the stats are about a billion dollars of fraud, two billion dollars of scams, and three billion dollars of hacks last year. Like that's that's a risky space. That's not to say everybody's bad, because that's not true. There are good players in that space, but it's a risky space, and so we expect banks
to do that work. And I think most banks either they're doing that work or they're decided it's just not really worth it.
So crypto is by no means a monolith.
And even though you've taken a cautious approach to stable coins, I get the sense that you're a little bit more interested in another aspect of crypto, tokenization. You're holding a big tokenization conference, right, what's the draw there?
So is hosting a tokenization symposium on February eighth, Market calendars open to the public. Our keynote is going to be Hyon Sugtion from the BIS. I know you enjoyed one of our favorites. Yeah, and and Hun is fantastic because he's got a very broad perspective across both monetary policy, research, banking, and all things kind of crypto digital assets related. Because that the BIS, I've got the innovation hub, and there's a lot of intersection between you know, his research and
what they've been doing. In a word, there's been a growing divide between crypto and tokenization and tokenization of real world assets and liabilities. Most crypto is not backed by anything bitcoin, ether, et cetera, or if yes or stable coins. Tokenization is a different game, you know crypto's it's retail focused and most of the interest in those coins is based on hope for speculative gain. Tokenization is about solving a settlement problem. And this is real for your listeners.
Now we're in the plumbing of the system and for those who know, like when you buy a share of stock, there's all this stuff that happens in the background. It involves multiple players, there's different handoffs, there's risk that gets transformed into different ways. It's complicated, and it's it creates frictions, and it creates costs. So if there's a way to
make that settlement process better, why not. And I think that's the that's the promise of tokenization, is that some of those risks and frictions can be addressed by basically taking messaging and settlement and combining that.
And can you explain that a little bit further Because when I think I think tokenization, I think, like, I presume these are centralized databases, and then I think, well, what's the difference between a tokenized central database versus an Excel spreadsheet? Right that's password protected? Yes, Like what is the innovation here? Right?
So this is a very important point blockchain. I I didn't say.
Blockchain, No you didn't, okay, And I think that's a.
Very important distinction, right. I think there's been a little bit of a how should I what's the best way to put it? It's almost like a raw shot test, you know, you say blockchain, and some folks that, oh, that's the next big thing, whether they understand it or not, like, oh, it's super efficient and fast. It's not super efficient or fast.
I mean, I remember that the years when we were going to put everything on the blockchain, like groceries or like balsamic vinegar was going to be traceable on the blockchain to make sure it came from a specific region and things like that.
Right, and so the design of public blockchains was there were certain reasons for doing it. If you go back to the the Satoshi Nakamoto white paper, that paper is pretty fascinating and it's a really interesting paper, and it makes the case for why you should do something that way. But to your point, Tracy, if the problem you're trying to solve is settlement frictions, you don't need that, and in fact, that probably just slows things down and gums
things up. They're better to do that. Now, what's the what's the innovation? That's your question. What's the innovation? It's basically taking messaging and settlement and combining it. That's different because right now, when you again we'll use the example, when you buy a share of stock, you're sending a message to buy, you know, a share of Tesla or something, and then that message goes and then a bunch of other things have to happen before that thing actually settles.
Your money gets transferred, you get a share of stock, and that's held somewhere, and you have everyone's fully aware that that has happened. With tokenization, you actually collapse a lot of those steps into into a single thing.
Oh, I see, So multiple processes can exist as sort of like one thing exactly that can then move through the system and be verified exactly.
And you know, for again, for the for the for the banking nerds and the payment nerds out there, this is exciting. Now it's hard to tell this story to a retail because it's hard to see that difference. But those costs and those frictions add up, and there's quite a bit of time and effort that gets put into identifying, addressing, assessing,
managing those risks and frictions. And so you know that in the for the regulators in the central banks that had been kind of interested in this space, a lot of the the more of the excitement going forward is really in this kind of tokenization space rather than in kind of the retail space, which I think is been colored by a lot of the recent of vicaild accent.
Well, since we're on the topic of financial innovation and we are essentially at a fintech conference. We're at Money twenty twenty. I want to ask you about a recent publication from the OCC. It's the inter Agency has a very catchy name, the inter Agency Kidance on Third Party Relationships. Is that just basically a way of saying that you're worried about fintech partnerships with the banks.
So the guidance is broader than just that, but you're onto something. So let me let me just zoom out for a second. That guidance is geared towards banks relationships with any vendors, any third parties.
Okay, so payments as well and things like.
That, but a bunch of others as well. And so you know, the story I like to tell is your way back in the beginning, all of banking was done by banks, and so you can imagine like there's like a box and you can label that banks and banking ills the same box. They did everything by themselves, and then over time they had to rely on others to do certain things. And you know, probably the clearest example
is like with the core processors. A lot of banks rely on the core processors to do certain processing accounting, you know, reconciliations, et cetera. And so that's now there's a dependency. And so as a regulator, you say, how do I ensure that everything that that bank does is safe, sound and fair. Oh, I need to make sure that
what they've done with that third party is up to snuff. Right, If it's slipshot, if it's done sloppily, things can break and then the bank will say, oh, that wasn't my fault, and they'll blame it on someone else. But at the end of the day, the bank itself is not going to be safe. We don't have a safe and sound system. So we want to make sure that that standard kind of carries through. It's almost like an extension of the bank, if you will. Okay, that's one on one. Now we
fast forward to today. Now it's way more complicated because not only do you have lots of different kinds of vendors, Like a lot of banks are now saying, hey, why stop with cores. We can do this with a lot of because our comparative vantage is different than a lot of the technology that's out there. There's a whole bunch of different use cases in terms of vendors. Now the
tables are being turned. Now you've got some FinTechs that are going to customers say we will be the interface with you to take a deposit and make a loan, et cetera. But we need a bank to actually do that, and so then they go to the bank. So in the sense the bank is the is the provider. That's why it's banking as a service, the bank providing that service. But the dependency is flipped around.
Yeah, it's almost like, you know, we used to talk about the disintermediation of banks, and someone brought this up in our discord recently. Apparently I wrote an article which I'd forgotten, but all the time, Yeah, when there was all that excitement about peer to peer lending or direct lending. Yeah, Wells Fargo apparently like put out a notice to its employees saying, please do not invest in peer to peer
lending because they're a direct competitor to us. Right, the whole idea was cut out the banks and people could make loans to each other. But now it's almost like disaggregation. It's we're disaggregating the banks. We're sort of like taking pieces away, or like there are new players, new companies that are tapping the banks for specific pieces it's all very confusing.
Well it's confusing, but there's there's a logic to it. And so the analogy I like to draw is if you go back to pre two thousand and eight capital markets disintermediated banking, and it was really the the lending and the deposit taking right. Money funds took deposit taking, and securitization took blending.
By the way, this is how you get a financial journalists attention. When you say here's a pre two thousand and eight analogy, I'm all ears, I'm like, yes, tell me so.
If you drew a picture and one of my favorite pictures of this Zultan pos Aar, who is another favorite, He drew this map, his famous map.
That he had pinned on the wall of the New York Fast more than I mean a bunch of a bunch of folks had this.
It was a gigantic map, and uh, you know again for the nerds on the podcast, it was it's basically t accounts, assets, liabilities, equity, but for different points of a system. And it did what any good financial follow the money right. You just follow the money.
Right, how it's moving through the banking system and the shadow banking system and.
That so Zultan and then Adam Ashcraft was a co author on the Shadow Banking paper, which basically said what banks used to do as lenders has now been broken up into six pieces or multiple pieces, and each piece is being done by a differnt group. So origination, remember new century, and option to one. They would do originations for mortgages, warehouse lenning, someone else would do warehouse lending. Distributions someone else would do. So you and you look
at that and say, well does that make sense? Well, there's like a specialty there, okay, and maybe they're particularly good at that, and there's economies of scale.
Yeah, they would argue efficiency.
Right, efficiencies, and so you'd say that that logic in and of itself on a micro scale made sense. It's only when you zoomed out and you looked at the whole thing that you said, oh, oh does this hold? And I think the real the insight from the you know, the Posar Ashcraft work was all the FED facilities matched up to each of those points. So it's almost like the discount window was recreated for what had been disintermediated,
which is quite intuitive actually. So it gets back to this idea I have, which which I think others have talked about it's like you've got the conservation of matter. Like risk is neither created nor destroyed. It just it can transform and be chopped up and reallocated. But it all adds up to the same thing. And so now we fast forward to today and this is what's happening
with payments. And if you talk to the payments companies, they say, it doesn't make any sense to basically have a full system like front to back on this, like you want to slice it up, because different companies do a different job on things where they're better at it. So it's very similar logic to the capital markets systant mediation. And again each point makes sense when you do it one by one, when you zoom out, what does it look like and what's the risk reward and who's bearing what risk?
Well, okay, so just on this point, I mean, maybe I'm reading too much into the two thousand and eight analogy, but like one of the reasons it all went off the rails is because as you had all these different entities doing different things, there was kind of less and less return for all of them, and so the temptation was to start levering it up and try to amplify whatever yields you could get. Is that the risk here or I guess talk to us concretely about the risks.
And then secondly, is there enough for return to actually go around?
Because when I look at all.
These different little pieces of banking services, it feels like there are so many players all kind of offering similar things.
So I think that's a very very valid question. And I know there have some both fintech and bank analysts who have kind of looked into this, and they're raising very similar questions like is there enough to go around to support such a complex ecosystem. But let's take a step back. Let's go back to banking as a service. With banking as a service, there's a spectrum, and at one end of the spectrum, you'll have what I think
of something that's relatively simple. You've got a fintech, you've got a really cool app targeted at a population that they're really familiar with, they know it's going to work, and you've got a bank who traditionally doesn't know how
to engage to acquire that customer. So they partner together and they said, let's go get that customer together, and the bank says that customer is my customer as much as it is yours, and they apply all the KYC and the compliance and all of the bells and whistles that they would provide to any other customer is apply to that customer. Very simple, hard to scale, but relatively simple, straightforward, and then they you know, what's the rev split between
those two and they can negotiate that. At the other end of the spectrum, you've got banks, who then who do they deal with. They're like, this is too complicated. We just want to provide the banking as a service, but we want to do it at scale and low. Behold. There's some companies out there. This is what they do.
So you know, often they're referred to as middleware and they'll say, well, if you come to us, we have partnerships with lots of FinTechs and we have partner and they tell the FinTechs we have partnership with lots of banks.
It's funny.
It's like there's wear all the way down.
Yes, yeah, so funny.
And so they go to them and again there I don't want to paint all of them with Abroad, there is a there is a spectrum on this, and some of it is done in a way that I think can be safe, sound and fair, and others we've seen that's not the case. And so in those instances, the bank has no idea who the real customer is and the fintech is like, look, we don't do compliance, we don't do ky. See, someone else shall handle that. And so we're right back to this picture of each slice
is doing something slightly different. And you know, in my experience where that happens unless there's a lot of clarity about who's bearing what responsibility when bad things happen, everyone's pointing at each other and that that's a mess. And
we don't want that. And so, you know, it's really important for us as this ecosystem evolves, and we've got an eye on that and we guide it towards, you know, things that are healthy, because there is good innovation out there that can be paired, that can be incorporated to the banking system. But we want to make sure that we don't end up with this kind of patchworky you know, disintermediated, disaggregated mess.
Since you are the oldest banking regulator in the US, I want to ask you a little bit about the banking landscape post SVB, And one thing that it feels to me that regulators are still sort of grappling with is what they want the banking system to look like. Yes, do you want a sort of Canadian style system where you have like six megabanks and everyone banks with them
and they're highly highly regulated. Or do you want the sort of vibrant, it's a wonderful life style banking system where there's local banks everywhere and everyone knows you, and you know your banker will personally extend you alone and things like that. Where does occ fall on that debate?
Do you have a vision of what you want?
I get this question a lot, and it's half a loaf of a question. And the reason I say that is because it's, just like you said, the instinct of folks who are asking you are who are contemplating this usually is to say there's too manyks, Like you know, four thousand is too many, what's the right number? Or to compare to other countries. And what it's missing is banks exist to serve people in communities in the economy.
So what's missing from the question is, well, who are the people communities in the economy that we're trying to support. The US is very very different in Canada, right, We've got three hundred and thirty million people, We've got a very diverse economy, lots of different communities, and so that argues that we need to have an equally diverse banking system. So it's almost like, you know, regulators, we bank love
to think in terms of ratios. So the question of like what should the banking system look like is the numerit the denominator is what the economy looks like. And as long as we have a really diverse economy, we need a really diverse banking system because one size doesn't fit all, Like the large megabanks can't serve don't want to serve all those different you know, I've got this debate yesterday with one of the participments about this long
tail of cases in the US economy. We have a very long tail of different communities, whether they're geographic or otherwise, and I think those are opportunities for banking. So then the question is like what is the best way to meet and empower all of them? That to me, that's the real central question of merger policy. How do we set up merger policy so that we're approving, we're considering mergers that empower those communities.
Oh yes, so I believe there was some discussion of updating the Merger Guidance post SVB to sort of get at this question.
Is that still on the table.
Yes, absolutely, it's on the table and it's taking some time, but it's because we want and we need to put people communities at the center of that analysis. You know, we've got statutory factors. We're kind of working through that, and there's a lot of detail around that. But as long as we have that long tail and as long as the US economy keeps growing, you know, the banking
system has to grow with the US economy. So if you were to just graph US GDP and the side of the banking system, they pretty much match on top of each other. So as long as the US economy keeps growing and different parts of the economy grow, we want and need the banking system to grow with that. It's got to be safe, sound unfair. And this is why I spend so much time on large banks, because there are going to be more and more complex large
banks in the future. They need to be resilient, they need to be resolvable and they need to be manageable, and so we spend a lot of time like, let's articulate that so we don't get back into the pre two thousand and eight pickle where you've got large banks that are not either resilient, resolvable, or manageable. That's not a place that we can afford to be.
So, since we're talking sort of existential questions for the US banking landscape, one of the things that's been on my mind, especially in the context of fintech and I guess payments, innovation and things like that, there is still a difference in the US between commerce and banking, and it's sort of like never the Twain show me. Every once in a while there's a rumor that like Walmart wants to start a bank or something, and then it gets shot down because it's not allowed in the US.
But I kind of wonder, you know, post SVB, as banks continue to be disrupted by new digital technology, there are digital bank runs nowadays and things like that, would there be room for a bank of Apple, for instance, or a bank of Amazon, or even a bank of Berkshire Hathaway.
I know it's not a tech company, but.
You know, these are companies with huge amounts of money. Maybe it would be nice to have a really well capitalized bank as interest rates are going up.
So this is probably you need an entire other podcast to talk about this. It's a fascinating question. The history of the blending of banking and commerce is not a good one. In generally the history.
Is wasn't Well's Fargo as stagecoach operation that seemed to work out?
Okay?
Where we have I mean, if you go back to two thousand and eight.
Right, like you'd say, like the facetious but you're right, But.
There we have lots and lots of examples where we said, hey, wouldn't it be great if we took these things and like you take the best of each and it's like, you know, the chocolate and the peanut buttery, you put them together and we get something better. And in almost every single case I can think of, it's ended quite badly. And there's two problems that are associated with that which
we really have to be careful of. One is there does become an unusually high concentration of power market power, because they reinforce, the banking and the commerce reinforce each other in the way that's quite unfair and that can have you know, a lot of negative impacts. So that's one thing to be attentive to. And the other is the opportunities for problems go up because now how commerce
goes impacts banking. And again that's not a safety and sound that's that's outside of the zone of how safety and sound is a supervision a typical thing goes. So that's that's why we've had this separation. I do think today, going forward, this is going to become a bigger and bigger question to deal with because payments by itself is commerce.
When you start to put it next to things that are adjacent to payments, lending, credit deposits, savings, et cetera, that's banking, and this is this is a very fluid you know, rarely does the payments company say we're just going to do payments and that's all we're gonna do forever. At some point they say, hey, wouldn't it be great if we just did a little bit of you know, paid a little bit of yield on this on this cash that's sitting with us. Wouldn't be great we did did some lending.
It's a slippery slope to being a bank. Yes, happened to everyone.
Yes, and so we want to be really really attentive to that. And look, if there's a way to do it that's going to be safe, sound and unfair without financial stability concerns, I'm open, like, let's talk about that. But history has proven that that's.
That's tough to do, all right, Michael Sue, thank you so much for coming on atholet's really appreciate it.
Thanks so much for having me.
All right, Well, that was the live conversation recorded at Money twenty twenty with the OCCS. Michael Sue, Joe, do you regret not going Tracy?
You're so capable as a host, That is my conclusion. You're so capable as a host you don't even need me. And I think next year we're going to be sending you on the road for a lot of solo trips and I'll just hang back in.
Tweet you flatter me to make yourself feel less guilty.
But that's okay.
I thought it was a super interesting conversation. Michael's a big All Thoughts fan, which was kind of fun, and maybe we inspired him with the supply chain analogy.
I hope so me too.
I love it all right?
Shall we leave it there?
Let's leave it there.
This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.
And I'm Joe Wisenthal. You can follow me at The Stalwart. Follow our producer Carman Rodriguez at Carman armand dash Ol Bennett at Dashbot and kel Brooks at kel Brooks. And thank you to our producer Moses Ondam. From our Odlots content, go to bloomberg dot com slash odd Lots, where we have a blog, a transcript, and a weekly newsletter that comes out every Friday. And check out the Odlogs Discord Discord dot gg, slash odd Logs chat with fellow listeners twenty four to seven.
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Thanks for listening.