Is that what it is though? It seems weird that such an overwhelming majority of US retail banking customers are using a domestic institution if the foreign ones are getting a fair shake, doesn't it?

Countries do a thing where they call something "neutral rules" while crafting them such that only the domestic incumbents can satisfy them or they can be selectively enforced against anyone the regulators don't like or who actually does or is deemed likely to refuse to comply with extralegal requests that the law doesn't or couldn't require. The US financial regulators do exactly that and you can see it in the outcomes.

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vkou 3 days ago | parent [-]

> It seems weird that such an overwhelming majority of US retail banking customers are using a domestic institution if the foreign ones are getting a fair shake, doesn't it?

Why is it weird? All other aspects being equal, why would you want to put your money into a bank that's accountable to another government first, and your market second?

Banking involves a ton of (unverifiable from the retail end) trust. There are a lot of risks to it. Going with a local institution mitigates some of them, and going with a foreign one adds very few benefits (Unless you're doing a lot of business in their home country).

You can absolutely bank with a foreign bank. HSBC is a giant international bank. TD and RBC are Canadian banks with branches in the US (RBC's are whitelabeled as City National Bank). If you want to do some tax evasion, or deal with the fallout of rogue traders, or bank with someone who has the rotting corpse of Credit Suisse anchored around its neck, you're free to do your retail (or investment) banking with UBS.

Why aren't you using them?

I assure you, you'll find the experience largely interchangeable with the same level of service you'd expect from any of the Big Four.

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AnthonyMouse 3 days ago | parent [-]

> All other aspects being equal, why would you want to put your money into a bank that's accountable to another government first, and your market second?

Because if they were operating in the US then they'd be FDIC insured and subject to US courts like any US bank, and because all else isn't equal. They could be offering better interest rates, or lower fees, or better customer service, or anything else that could make customers want to use them. And since they want business, they'd do those things to exactly the extent it would take for them to get market share. Unless something is preventing that.

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vkou 2 days ago | parent [-]

> Unless something is preventing that.

It's not! I've given you four examples of large foreign banks that you - you can walk into your nearest US branch of and open an account with, today.

For some strange reason, you'll find the service, interest rates, and everything else about them to be essentially the same damn thing as you'll get from the big four. Retail banking is a commodity at this point.

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AnthonyMouse 2 days ago | parent [-]

> I've given you four examples of large foreign banks that you - you can walk into your nearest US branch of and open an account with, today.

Trade barriers generally aren't when something is fully impossible or illegal, they're when it's impeded in some way to sustain an advantage for domestic companies. There are an infinite number of ways to do that and it's often layering them on top of each other rather than any one individual thing, but strong evidence of that happening is if it's achieving the intended result, i.e. that domestic companies have the large majority of the domestic market, whereas the same companies competing for the same class of customers in a different country have a lower share. When the only difference is the law, "a law that creates an advantage for domestic companies" is what a trade barrier is.

> Retail banking is a commodity at this point.

Except where it isn't.

For example, suppose you want a specific service: We don't freeze your account without a court order. A foreign bank would nominally be in a strong position to do this, because they could keep the money somewhere else and then you could get to it in Ireland or wherever even if the US subsidiary was under extralegal pressure to cut you off. It would force the US to use official process that gives you legal recourse instead of strong arming in the back room.

Unless the strong arming takes the form of keeping them out of the market or assuring that they have negligible market share, which is the trade barrier.

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vkou 2 days ago | parent [-]

Your argument is one of spherical cows. I'm giving specifics. You can walk into a TD branch today, and get the same shitty service as you will from Wells Fargo. TD is a large, but not a dominant bank in the US. If anything, this is proof that there isn't a significant regulatory trade barrier to banking. Here's a foreign bank, it meets all the rules for banking in this country, it's service offerings are ~the same as the local ones. It's proof that banking is commoditized, and only people with very special requirements would choose a foreign bank over a domestic one (In this case, Canadians living in the US have reasons to use it).

> For example, suppose you want a specific service: We don't freeze your account without a court order.

And this, exactly is why your cow is spherical. The small number of people for whom this would be a legitimate differentiator aren't a market large enough for anyone to give a crap about. You're of course free to try to start a fintech startup for "People who are likely be the targets of extrajudicial account freezes", but I don't think you'll have the greatest... or the greatest customer base. Which country your parent company is incorporated in will be the least of your problems in running that business successfully.

You're also starting from the mistaken assumption that a court order is the only legitimate reason that this country's legal system believes an account should be frozen (it's not[1]), or the only legitimate reason that you would want your account frozen (it's not). But you can abstract anything away in hypotheticals - that's the beauty of them.

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In none of this you have demonstrated how consistent, country-of-origin agnostic regulation is a trade barrier that unfairly advantages domestic firms. But you have introduced a lot of complexity (and much misunderstanding) by picking a subject as complicated as banking.

Let me make it simple - Is Quebec putting up unfair trade barriers because it requires products sold in it to be labeled in French? What stops foreign vendors from meeting that same requirement?

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[1] And when you discover that assumption was incorrect, the relevant enforcement agencies won't give a crap if your head office is in Chicago or Timbuktu[2] - because you need to have a local presence (and an account at the Fed) to operate which is the same bar that all the domestic banks also have to meet, they'll have plenty of people to haul off to court.

[2] If this mattered, then this would provide an unfair advantage to the foreign company which is an utterly asinine way to run your country.

	▲	AnthonyMouse 2 days ago \| parent [-]
		> The small number of people for whom this would be a legitimate differentiator aren't a market large enough for anyone to give a crap about. There are 340 million people in the US and significantly more people who would want that service than some credit unions have total members. And you don't have to offer only that, but now who is offering that at all? One of the hallmarks of a competitive market is that there is someone trying to fill every niche. > You're of course free to try to start a fintech startup for "People who are likely be the targets of extrajudicial account freezes", but I don't think you'll have the greatest... or the greatest customer base. Which country your parent company is incorporated in will be the least of your problems in running that business successfully. This is the issue. You're willing to provide service to sex workers etc., but your problem isn't them, it's what the government does to you if they don't like what you're doing. And it's not about how many people want that in particular, it's a demonstration that the government has the capacity to suppress things it doesn't like without formally having a rule against them. > You're also starting from the mistaken assumption that a court order is the only legitimate reason that this country's legal system believes an account should be frozen (it's not[1]), or the only legitimate reason that you would want your account frozen (it's not). I'm starting from the assumption that promising not to freeze your account means without your permission or ability to undo. > In none of this you have demonstrated how consistent, country-of-origin agnostic regulation is a trade barrier that unfairly advantages domestic firms. This one's the easy one. It's when they're subjective or rely on prosecutorial discretion rather than actual compliance with unambiguous rules. Because then the rules aren't actually the rules, they're just the book they flip through to find a violation when they want to put their thumb on the scale. And to be clear, the US has both. There are rules that, if you violate them, you get punished. These are even the majority of what actual prosecutions are about. But then there are the ones they can threaten you with when they want you to do something or not do something that isn't written down, or they just don't like you and want to frustrate you. > Let me make it simple - Is Quebec putting up unfair trade barriers because it requires products sold in it to be labeled in French? What stops foreign vendors from meeting that same requirement? In a technical sense it is, because it's a requirement that makes it easier for domestic sellers who are focused on the local market and would be paying the cost of labeling in French already, whereas small foreign sellers might be able to enter the market by putting their existing products on a truck but having to run a separate production line with a different product label would exclude them. But it's also probably a very small one, so then is it enough to have a significant effect? And we're back to market share being evidence.