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Instead of obtaining a warrant, the NSA would like to keep buying your data
by jdb10987＠yahoo.com 01 Aug '23

01 Aug '23

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CoinDesk: SEC Asked Coinbase to Stop Trading in all Cryptocurrencies Other Than Bitcoin Before Suing: Report
by jim bell 01 Aug '23

01 Aug '23

https://www.coindesk.com/policy/2023/07/31/sec-asked-coinbase-to-stop-tradi…

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Rise of AI necessitates rethink on biometrics
by pro2rat＠yahoo.com.au 31 Jul '23

31 Jul '23

https://cointelegraph.com/explained/what-is-worldcoin-and-how-does-it-help-… Not endorsing this approach - just sayin' Spechen zee talk?

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Re: [spam][crazy][fiction][random] Non-Canon MCBoss Spinoffs
by Undescribed Horrific Abuse, One Victim & Survivor of Many 31 Jul '23

31 Jul '23

On 7/31/23, Undescribed Horrific Abuse, One Victim & Survivor of Many <gmkarl(a)gmail.com> wrote: > :D >

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Re: [spam][crazy][fiction][random] Non-Canon MCBoss Spinoffs
by Undescribed Horrific Abuse, One Victim & Survivor of Many 31 Jul '23

31 Jul '23

On 7/30/23, Undescribed Horrific Abuse, One Victim & Survivor of Many <gmkarl(a)gmail.com> wrote: > [different task than reading is what's up !] >

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THE FOG OF (DEPOSIT) WAR
by Gunnar Larson 31 Jul '23

31 Jul '23

https://workweek.com/2023/07/21/the-fog-of-deposit-war/?utm_source=Sailthru… Subscribe 21 JULY 2023 | FINTECH THE FOG OF (DEPOSIT) WAR BY ALEX JOHNSON Do you hear that? That dull, almost imperceptible roar? Like a giant engine quietly idling? Or a massive storm, just creeping over the horizon? Yeah, what you’re hearing there is actually the sound of thousands of banks jostling with each other over deposits. The Wall Street Journal reports: Deposit costs jumped sharply at all four banks that reported on Friday, which also included Citigroup. On average, the rates on interest-bearing deposits were around a fifth higher than they were in the first quarter. That was a slower pace of increase than from the fourth to the first quarter. However, base interest rates set by the Federal Reserve didn’t rise as much during the second quarter—so the pace of deposit-rate increases accelerated relative to the increase in the average federal-funds rate. No banks are safe from the pressure, it appears. In response to a question on Friday from analysts about customer demands for higher rates, JPMorgan Chief Executive Jamie Dimon warned everyone to anticipate more on this front. “There is very little pricing power in most of our business, and betas are going to go up,” he said, with “beta” referring to how much of an increase in base interest rates banks pass along to customers. Brian Foran, an analyst at Autonomous Research, wrote in a Friday note that this outlook coming from the biggest bank in the country was “a definite curb your enthusiasm moment.” And it’s not just interest-bearing deposits that banks are struggling to retain. Here’s the journal again: there continued to be a shift out of banks’ “golden” deposits, which are those that collect no interest at all. Excluding JPMorgan, whose numbers were skewed by taking on First Republic Bank’s customers, overall deposits at the reporting banks on Friday were down 1% quarter-over-quarter by period end. Non-interest-bearing deposits were down over 7% at those same banks. That increases banks’ deposit costs even beyond what their average deposit rates indicate. Cheap deposits – a feature of the modern banking landscape, a resource that became so overflowingly plentiful that banks almost drowned in it during the height of the COVID-19 pandemic – are disappearing. The Federal Reserve’s campaign of quantitative tightening has led to a significant increase in competition among banks for retail and commercial deposits. This is challenging for banks in the way that rising interest rates are always challenging for banks (managing the costs to acquire and retain deposits in order to protect net interest margin and maintain adequate liquidity), but it’s also challenging in a completely new way (the last time banks were operating in a sustained rising/high rate environment, we didn’t have smartphones or open banking or fintech). This has cast a cloud of uncertainty over the industry. No one really knows exactly how depositors will behave. All we know, thanks to Silicon Valley Bank and First Republic, is what it looks like when things go catastrophically wrong. This is the backdrop for the Q2 earnings that banks, big and small, have been reporting over the past week or so, and it seems to me a good time to take stock of banks’ current thinking on deposits and to propose a few questions for them to think more deeply about for the future. To help me do that, I’m going to draw on public comments made in the Q2 2023 earnings calls of some regional and super-regional banks, as they are, no offense, much more interesting than the big four. WHAT ARE LARGE REGIONAL BANKS THINKING ABOUT RIGHT NOW? Remix! One trend that we seem to be seeing across the board is a shift in the mix of deposits that banks have, from non-interest-bearing accounts (the “golden” deposits that the WSJ referred to above) to interest-bearing accounts (interest-bearing checking accounts, savings accounts, CDs, etc.) Not surprisingly, this shift is much more pronounced among commercial deposits as opposed to retail deposits. This makes perfect sense, as companies tend to be more disciplined in maximizing the return on idle cash than consumers. Here’s PNC: Deposits continue to move from non-interest bearing to interest bearing accounts. As expected, the mix shift is being driven by commercial deposits. In the second quarter, commercial non-interest bearing deposits represented 45% of total commercial deposits compared to 47% in the first quarter. Our consumer deposit non-interest bearing mix has been stable remaining at 10%. This remix obviously leads to higher deposit costs, as banks go from paying no interest to paying interest. Additionally, all banks are reporting that the amount of interest that they are being forced to pay on interest-bearing accounts in order to attract and retain customers is also increasing, leading to higher deposit betas (the percentage increase in base interest rates that banks pass along to customers). Primacy, Operating Accounts, & Relationship Banking Of course, in order to maximize profit, banks want to find ways to retain customer deposits without having to pay more for them. There are a couple of different ways that they talked about doing this. The first is primacy. Here is Citizens Financial Group bragging about the impact that simple neobank innovations have had on its ability to establish engaged primary banking relationships with retail customers: So we did things like get your paycheck two days early. It doesn’t seem like a big deal, it’s actually an incredibly big deal. That’s driving a lot of primary banking behavior. We’ve got technology we put in place that when you open a new DDA, you’re automatically porting over your direct deposit that seems very operationally oriented. But it actually is a dramatic improvement that things like primary banking behavior which drives low-cost deposits. We’ve made overdraft perform through our Peace of Mind 24-Hour Grace program and a variety of other things, which has also driven a lot of primacy Who knew? You give customers their money faster and don’t penalize them for every little mistake, and they are more willing to stick with you (without requiring a bribe). This same general thinking applies to the commercial side as well, but the big difference is that in order to retain commercial deposits (which tend to be more rate-seeking), banks need to retain those companies’ ‘operating accounts’ (i.e. the demand deposit accounts that they use to make payments and run their business). A good example here is Fifth Third, which has made a number of acquisitions recently in order to build out its embedded payments business for commercial customers. This is really smart as it not only provides a new business for Fifth Third to grow and monetize directly, but also serves to make Fifth Third that much more of an operating hub for its commercial customers, and, thus, a sticky home for those customers’ deposits. And finally, we see some of these banks insisting that their commercial customers acquire both lending and deposit products from them, thus capturing the entire relationship. Here’s Western Alliance Bank describing this new approach: we are looking at a full client relationships and we are not — no longer just giving credit and then worry about how we fund it away from the client. The client needs to have a full relationship with us. You may remember SVB employing a similar strategy, which, of course, didn’t save them when all their customers decided to sprint to the lifeboats. Speaking of which … Reassurance Unlike its super-regional and national bank peers, smaller regional banks like Western Alliance have to worry about a similar panic to the one that took down SVB and, in a less dramatic fashion, First Republic. Hence Western Alliance’s repeated focus stability in its earnings presentation: we have actively utilized reciprocal deposit channels to drive growth and provide greater insurance coverage to larger depositors. 62% of broker deposits consist of sticky reciprocal deposits. We believe these core client relationships have been fortified through this product enhancement, making them exceptionally stable. Reciprocal deposit arrangements, in which funds received by a bank through a deposit placement network in return for placing a matching amount of deposits at other network banks, are a very effective tool for expanding customers’ effective FDIC insurance coverage beyond the standard $250,000 limit. By providing reassurance, Western Alliance believes that it can kickstart a positive feedback loop with commercial depositors, who will feel confident enough to bring their business back to the bank: We are seeing that pipeline reappear, it’s stronger. … a lot of people wanted to wait until we were announcing our quarterly earnings. I think that will make people feel comfortable and we have some great deal of comfort on that pipeline returning, which gives us comfort to the $2 billion guide that we have put out there for deposit growth. Customers Have Less Money This one is simple, but it’s a good reminder. Beyond rising interest rates, part of the challenge for banks’ deposit franchises right now is simply that their customers, particularly their retail customers coming down off of pandemic-era stimulus, have less money (and spend less money) than they did a few years ago. Here’s how Fifth Third described it: So in terms of consumer on the household side, we do have a very strong and consistent growth of 3%, but offsetting that tailwind is the headwind from consumer spending and the declines in the average deposit balance. So when you look at the consumer, the average deposit is still 20% higher than pre-COVID levels, but it is down 10% from the COVID average balance peaks. Translation? Customers are still better off today than they were pre-Covid, but that margin is shrinking. I also found this fascinating: Consumers have held up well in aggregate, but there has been a divergence between homeowners who were able to lock in historically low mortgage rates and renters who have had to face persistent inflation in their largest monthly expense. Compared to three years ago, homeowners in our deposit base have maintained strong deposit balances, whereas renters deposit balances are down meaningfully. WHAT QUESTIONS SHOULD ALL BANKS BE THINKING ABOUT FOR THE FUTURE? The overarching feeling that I got, reading through a lot of the bank Q2 earnings call transcripts, was a kind of forced calm, as if the CEOs and CFOs at these institutions were trying to reassure market analysts (and themselves) that they have a good handle on customers’ evolving deposit behaviors. Here’s M&T Bank’s CFO, framing it as a simple return to the pre-ZIRP days: if you go back 20 plus years and you look at the deposit that we had back then, CDs were 20% plus of our funding base. Right now, we’re at 10%, and we’re probably going to be in the mid-teens before it’s all said and done, it really depends on how long rates stay higher. And that’s just the normal mix of how we run our retail bank. I mean it’s the right thing to do. It’s the right thing for our clients. It’s the right thing for our bank. We can adjust our rate sensitivities with CDs on the books and manage that really well. So it’s just basically learning things that when you ran banks 20 years ago, we’re doing the same thing right now and doing it the same way. This is what I would have expected. C-level executives at banks are paid to project an air of confidence in public. They’re not going to dial into earnings calls and say, “Well, we had a pretty decent quarter, but we really have no fucking idea what’s going on or what’s going to happen next.” (Related – one amusing thing from all of the earnings calls I reviewed was the banks reporting that, relative to the first two months of Q2, June was a surprisingly good month for deposit growth, for reasons they couldn’t explain. They were basically just like, “Whelp, we hope this trend keeps up in Q3!”) However, behind closed doors, I expect that bank executives are thinking deeply about some fundamental questions about the deposit side of their business, including: Where are all of the commercial operating accounts, and how do we get them? In much of the Q2 earnings commentary, I was struck by the repeated references to niche commercial banking market segments and the focus that banks have on cultivating them. Here’s Western Alliance: we will see growth come for the rest of the year in business escrow services, in settlement services, in HOA. By the way, those are three standalone deposit channels, which we have been developing over the past couple of years And here is Citizens, bragging about the same thing: on the product side, we’ve done a lot around green deposits and carbon offsets deposits in our ESG strategy that was approved to be quite profitable. We’ve built out escrow products and bankruptcy products. So there’s a variety of product development things which are attracting nice operating deposits with some nice breadth for them. None of these commercial segments are all that large or (likely) all that profitable, but the reason that banks are so focused on them is that, in the aggregate, they represent a very sticky source of deposits. A company that is providing escrow services is, by its very nature, going to have very stable deposits because those deposits need to stay in those escrow accounts! HOAs are an even better example. It’s literally just a sleepy little operating account that homeowners pay dues into, and that occasionally gets drawn upon for specific expenses/investments. These niche commercial operating accounts are now the hottest commodity in banking. In a similar vein, I predict that we are going to see more mid-size banks follow in Fifth Third’s footsteps and attempt to establish new, innovative models for facilitating commercial payments. Much of this innovation will fall into the realm of embedded finance and banking-as-a-service, with the banks acting as indirect enablers of new commercial banking, payments, and expense management services (and providing the balance sheets for all of the resulting commercial deposits). How has technology changed deposit behaviors? This question has been brought to the forefront by the failure of SVB and the role that digital banking technology (and social media) played in its rapid demise. However, the implications of this question are much broader – how will the convenience, speed, and intelligence enabled by digital technology change the value of banks’ deposit franchises? Well, let’s take those one at a time. First up – convenience. Do digital innovations like mobile banking decrease the stickiness of bank deposits and, thus, reduce the value of banks’ deposit franchises? According to a recent academic study published by the Stigler Center for the Study of the Economy and the State University of Chicago Booth School of Business, the answer is yes: Since the Great Financial Crisis, over half of the roughly 4,000 existing banks have introduced a mobile app. Thus, moving money from a deposit to a money market fund can be done with a single mouse click without leaving your sofa. As a result, it is reasonable to expect that the demand for bank deposits has become much more sensitive to the interest rates offered by alternative forms of liquidity storage (like money market funds), especially in banks with well-functioning digital platforms. Having obtained an estimate for two of the key parameters of the … model of the value of deposit franchise, we can estimate that the value of deposit franchise is 40% lower in digital banks. Next up – speed. Would the ability to move money instantly, on any day and at any time, place additional stress on the liability side of banks’ balance sheets? I haven’t seen any academic research on this question (yet), but it certainly is something that folks are concerned about, as the Wall Street Journal recently reported: Speedier transfers carry another potential cost for banks. In addition to losing revenue from the time between a payment’s initiation and settlement, banks now have to worry about deposit flight outside of business hours. It comes just months after three major lenders failed in part because of rapid withdrawals and an inability to tap emergency sources of cash that were offline. instantaneous transactions allow customers to pull cash with ease, and without notice. That threatens smaller banks and likely requires stiffer cushions to mitigate adverse scenarios, according to [Noor] Menai, an advisory council member of the Federal Reserve Bank of San Francisco. I personally find concerns about the impact of faster payments mechanisms like FedNow on bank stability to be a bit overblown (if you’re dependent on 2-3 days of float to cover routine liquidity scenarios, you’re driving too close to the cliff), but certainly, it doesn’t make building a stable deposit franchise easier. (BTW, Kiah Haslett and I cover this topic in a lot more depth in our most recent Bank Nerd Corner podcast.) And finally – intelligence. As bank accounts and money movement infrastructure become more intelligent and programmatic, what impact will that have on deposit acquisition and retention? That’s obviously a broad question, so let’s anchor it on something more specific and timely – open banking. The CFPB has made it clear that its primary goal in formalizing open banking in the U.S. (via rulemaking on Dodd-Frank 1033) is to decrease switching costs for consumers’ transactional banking accounts: In an open and competitive market, it is easy for individuals to fire, or walk away from, their financial provider for whatever reason. For example, for most consumers, changing a bank account is a huge pain. Direct deposits need to be reset, as do scheduled payments linked by ACH or debit card. And consumers need to take these actions, while managing day-to-day liquidity issues. Our rule will facilitate third party companies that offer services to make switching recurring payments easier. A competitive market would also lead to unbundling where companies compete on individual products, rather than relying on captive customers or cross-selling scams. When markets aren’t competitive, we feel that we need to buy additional services from a provider we already worked with. But with more seamless integration, this will give us all more choice. more switching would lead to greater efforts by firms to maintain or win customer loyalty. If you’re a bank executive thinking about how to build a durable moat around your retail deposit business, those words from Director Chopra are abjectly terrifying. Will all retail customers become deposit optimizers? So, technology has (and will continue) to make it easier for consumers to open new accounts, move money, and, generally, optimize their cash on hand, in the same way that a team of treasury management professionals do for a large corporation. Does that mean that all retail bank customers will take advantage of this technology? Are we destined, as my fintech friend Rex Salisbury posited on Twitter, to end up in a world where banks are completely unable to retain deposits if they don’t pass 100% of every rate increase on to their customers? Ehhh … I’m not so sure. For commercial deposits, yes. I think this is where we will end up. The reason that VC-backed startups banking at SVB had large balances of uninsured cash sitting in their accounts was purely a function of bandwidth. Startup founders don’t have the time or expertise to moonlight as treasury management professionals, even though they do have a fiduciary responsibility to do so. This problem will be solved by technology. All of those ‘CFO in your pocket’ products that we have seen roll out in the B2B fintech space in the wake of SVB will help push all companies, regardless of size, towards a more well-optimized end state. Acquiring sticky deposits in the commercial space will become, almost entirely, an exercise focused on operating accounts. I’m not so sure this same trend will play out in the retail deposits space, even with the benefit of open banking and fast, programmable money movement. Consumers are weird. They value the status quo in ways that are difficult to understand or model from the outside. They don’t switch banks nearly as often as they should or even as they say they would, even as the cost of switching is reduced. This is deeply unintuitive to regulators (who are naturally distrustful) and VCs and tech startup founders (who are natural optimizers), but I do think there is (and will continue to be) some truth to it. What role can branches play in the deposit wars to come? My naive, fintech-y assumption would have been not much. In a digital-first environment, branches are more of an inconvenience that bank customers (both retail and commercial) are forced to deal with rather than a competitive differentiator for the banks that operate them. Turns out that maybe both things are true! In a National Bureau of Economic Research working paper titled, “Bank Branch Density and Bank Runs,” researchers point out that banks that spend money on technology tend not to spend as much money building branches and that those banks have a more difficult time holding on to deposits: banks with low branch density attract largely uninsured deposits through digital banking. Digital banking services provide convenience and speed, which appeal to both corporations and tech-savvy households with large funds to deposit. … We find that banks that made large investments in IT had lower branch density in 2022, with a one standard deviation increase in IT investment corresponding to 1.4 fewer branches per $1 billion of deposits (15% of the unconditional mean of branch density). Lower branch density allows banks to attract deposit flows and expand funding capacity. However, low branch density also lessens the value of the bank-depositor relationship—shifting the depositor base to corporations and tech-savvy depositors with large, mostly uninsured deposits. These changes to the composition of the depositor base turn out to be detrimental during market downturns: banks with lower branch density experience larger deposit outflows and worse stock performance. The argument made by this paper is that branches are useful for building durable deposit franchises, not despite the inconvenience that they impose on customers, but rather because of the inconvenience they impose on customers. The inconvenience, when paired with poor digital banking capabilities, is a feature, not a bug! The potential implications here are fascinating. Should banks be investing a lot more in branches? Can banks simultaneously build strong digital capabilities to facilitate the rapid gathering of hot deposits and new, dense branch networks where there is an opportunity to acquire stable, insured, less-tech-savvy deposits? Fifth Third (who is really fucking smart about this stuff) seems to think so: We have added over 70 de novo branches in our Southeast footprint since 2019, more than any other bank except JPMorgan. As a portfolio, these branches are outperforming their original business cases on deposit production with several producing at a rate of 200% to 300% of plan. How much, if at all, do customers value their overall relationship with us? Relationship banking, as the foundation for maturity transformation, has been the way that bankers (and bank regulators) have thought about their industry for a long time. We invest in deep, high-value relationships with our customers, relationships that they value. And that value affords us with a certain amount of confidence that those customers’ deposits won’t just disappear tomorrow, even though, contractually, they could. I do think there is something to this theory. It feels correct. But damn, it is hard to quantify. How do you value a relationship with a bank? Is it personal? The relationship you have with the person at the bank who you routinely interact with? Would you choose not to move your money to a higher-interest deposit account if it meant disappointing a friend? Is this model completely dependent on the in-person experiences of a branch, or can it be somehow replicated in other channels? Is it about advice? The guidance you receive from your bank on how to manage your finances and build wealth? Genuine question – does any bank (or fintech company) offer such uniquely good financial advice that it can serve as a competitive moat? Is it about the perks? The ski retreats and wine tastings and interest-only jumbo mortgages? Does offering outrageously generous benefits, for the transparent purpose of attracting wealthy customers, lead to a genuine relationship between equals? Is it about the bundle? The Amazon Prime-like combination of integrated features and benefits that make it intolerable to work with anyone else? Banks have pursued a universal banking vision, bound together by cross-sell and multi-product relationships, forever, but has any bank (or fintech company) actually figured out a multi-product bundle in which 1+1=3? Banks will (and should) factor relationship strength into their liquidity management and deposit retention strategies. I’d just encourage them to do so with a healthy amount of skepticism and humility. THE FOG OF WAR Banks are in a war for deposits. They didn’t start the war (the Federal Reserve did), and they can’t end it (only the Federal Reserve can). All they can do is fight it, to the best of their abilities. The winners will be those that can most effectively apply the lessons of the past without letting dogmatism dictate their strategy for dealing with an uncertain future.

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600 Kindergartners Were Given Bank Accounts. Here’s What They Learned. - WSJ
by Gunnar Larson 31 Jul '23

31 Jul '23

https://www.wsj.com/articles/college-savings-fund-san-francisco-85d32bf5 This is very cool. Since 2011, the City of San Francisco has automatically opened bank accounts on behalf of kindergarten students, depositing $50 in each one and providing a variety of mechanisms to help students and their families save more. The purpose of the accounts is to help students save for college, and, so far, the program has been an unqualified success. The program has 52,000 active accounts with a total balance of $15 million—$10 million of which came from deposits made by the students and their families. A few fintech nerd notes: The program couldn’t partner with California’s established 529 College Savings plan because the city wanted its program to be opt-out by default, more convenient for families to contribute to, and accessible to all families, including those who are undocumented (which presents KYC challenges). Instead, the City designed a custom bank account product structure with Citibank, which mimics some of the structural components of a 529 plan (e.g. the funds can only be used for qualified educational expenses) but is built on top of a FBO account/sub-account structure (with the City of San Francisco being the master account holder). Not that it probably matters to Citibank all that much, but I’d imagine that $15 million is a wonderfully sticky source of deposits. Perhaps regional banks should work with cities and states in their own backyards on similar programs?

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Bloom Money raises £1M to digitize finance for ethnic communities
by Gunnar Larson 31 Jul '23

31 Jul '23

Bloom Money raised a round: Bloom Money, a U.K.-based fintech, has raised £1 million to digitize an informal financial management system employed by ethnic communities across the world. Often referred to as “rotating savings and credit association” (ROSCA), the model varies in the details around the world, but usually, it involves an informal gathering of people from a certain community who act as a bank, collecting and saving money that members can withdraw. The system is called different names across the world, such as “hagbad” in Somalia or “pardna” in parts of the Caribbean. The goal is to avoid conventional banking systems, many of which discriminate against minority communities, especially in the U.K. So what? In the interest of full disclosure, I will say upfront that Bloom Money’s co-founder and CEO, Nina Mohanty, is a friend of mine and a brilliant human being, and I’m personally delighted that she has hit this impressive milestone! Nina was also the guest for the single most popular episode of the Fintech Takes podcast – Fintech’s Biggest Unsolved Problems. [OK, now I’m putting my fintech analyst hat back on.] This is a really interesting concept. The basic idea here is that in many cultures around the world, saving and lending money are inherently social activities conducted informally within tight-knit family and community groups. And rather than attempting to convince new immigrants to give up the ROSCA model and move to a more individualistic system, perhaps we should start by digitizing the model that they are already comfortable with. My assumption is that Bloom will use these savings clubs as a very gentle onramp into the broader U.K. financial system, which will present additional opportunities for product expansion and monetization. https://techcrunch.com/2023/07/27/bloom-money-raises-1m-to-digitize-finance…

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Apple and Amazon face UK class action damages suit over price collusion claim
by Gunnar Larson 31 Jul '23

31 Jul '23

A lawsuit against Apple and Amazon which alleges they abused their market power by colluding to increase the price of Apple products has been filed in the UK Competition Appeals Tribunal. The identity of the funder backing the claim has not been disclosed https://techcrunch.com/2023/07/26/apple-amazon-price-collusion-uk-lawsuit/?…

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The Stock of Kidney Dialysis Firm, DaVita, Has Soared 2,500 Percent Since 1996; a New Book Reveals the Dangerous Cult Behind the Rise
by Gunnar Larson 31 Jul '23

31 Jul '23

https://wallstreetonparade.com/2023/07/the-stock-of-kidney-dialysis-firm-da… By Pam Martens and Russ Martens: July 31, 2023 ~ Tom Mueller, Author of Crisis of Conscience -- Whistleblowing in an Age of Fraud Tom Mueller, Author of “How to Make a Killing: Blood, Death and Dollars in American Medicine” The chart above compares the stock price performance of the kidney dialysis company, DaVita (ticker DVA), with the Standard and Poor’s 500 Index since 1996. Right away, something looks very wrong. Why should a healthcare company delivering dialysis treatment to people with kidney failure make the kind of profits that would generate this outsized stock price return? Investigative reporter and author, Tom Mueller, has dedicated his latest book to pulling back the curtain on the dirty underbelly of this industry. The book, How to Make a Killing: Blood, Death and Dollars in American Medicine, will be available for sale in bookstores tomorrow. If you have a loved one receiving kidney dialysis at centers run by either DaVita or Fresenius, we urge you to stop what you’re doing, buy this book, and read it from cover to cover. The book presents nothing short of an indictment of rabid capitalism run amok, effectively turning what should be a life-saving branch of medicine into a criminal enterprise. DaVita and Fresenius are a duopoly, controlling about 80 percent of the 6,900 dialysis centers across America, writes Mueller. According to an economist, Ryan McDevitt, who has extensively researched the results of this consolidation and spoke on the record with Mueller, this is what happens when an independent dialysis center is acquired by the duopoly: “When DaVita and Fresenius acquire independent facilities, they start implementing their best practices, at least from their viewpoint, which means maximizing profits. So they’re pumping patients full of drugs. They’re cutting back staffing ratios. All the things that make a business really profitable and productive, they’re doing. Unfortunately, we find this has severe consequences for patients. Death rates go up, hospitalization rates go up, transplant rates fall, and so on. Any measure that could get worse pretty much got worse, after the big chains acquired independent facilities.” What is going on here is not a deep secret from the U.S. Department of Justice. Mueller explains that “Between 2014 and 2018 alone, DaVita and its subsidiaries paid out more than $1.5 billion in legal settlements and damages. DaVita’s founder, Kent Thiry, who ran a bizarre, cult-like atmosphere at the company – which is brilliantly depicted by Mueller in ghastly detail – stepped down in 2019 and was indicted two years later by a federal grand jury in Colorado. The Big Law firm, WilmerHale, brags on its website as to how it got both Thiry and DaVita acquitted at trial, writing: “A WilmerHale team led by Partner John Walsh and former Counsel Daniel Crump, working closely with lawyers from Morgan Lewis Bockius, achieved a landmark, precedent-setting trial victory for our client DaVita, Inc in the first-ever trial of a criminal labor market allocation case brought by the US Department of Justice. “On April 15, 2022, after a two-week trial and two days of deliberation, a federal jury in Denver acquitted both the company and its former chief executive officer Kent Thiry on all charges — three counts of criminal conspiracy to violate the Sherman Anti-Trust Act. “The stakes were extremely high. DaVita faced fines of up to $100 million per count while Thiry faced a maximum penalty of 10 years in prison and a $1 million fine per count.” Morgan Lewis Bockius, the law firm mentioned above that worked with WilmerHale to achieve this acquittal, currently has its former partner, Kenneth Polite, sitting at the helm of the criminal division of the U.S. Department of Justice – despite a financial disclosure form that suggests he was never seriously vetted for the job. WilmerHale is the 1,000-attorney firm that is currently defending JPMorgan Chase in federal court (a serially charged bank that has racked up five felony counts on other matters since 2014) over very credible claims that it “actively engaged” in Jeffrey Epstein’s sex trafficking of underage girls for more than a decade. One of the most shocking revelations that Mueller shines a light on is that both Fresenius and DaVita provide “shorter and higher-speed dialysis, which enables them to process more patients per day.” Tragically, that speed comes at a cost to patient health. Mueller writes that “In clinics where dialysis is slower and gentler – in high-quality, nonprofit centers in the United States, for example, and in many parts of Europe – patients live better and survive longer…For good medical reasons, in fact, nephrologists [kidney doctors] in other developed countries typically avoid the kind of treatment [endured by patients] in clinics throughout America. Many condemn it as dangerous….” The death statistics also speak volumes. Mueller writes: “ ‘The survival rate in the United States, where around 22 percent of patients die every year, is the lowest in the industrialized world,’ says Leonard Stern [a nephrologist]. ‘The mortality in Japan is only 5 to 6 percent per year, and in Western Europe it’s in the range of 9 to 12 percent per year….’ ” In Mueller’s last book in 2019, Crisis of Conscience: Whistleblowing in an Age of Fraud, he made the formidable case that the United States has become a dystopian society where almost every government entity that a citizen would typically turn to for redress over a lawless act has been corrupted by greed, pay to play, revolving doors, political bribes, or self-dealing. The fact that a new U.S. President took office in January of 2021 and yet he nominated, and the U.S. Senate confirmed, a former partner of a Big Law firm that defended against some of the worst criminal activities of corporate America, who is now sitting at the helm of the criminal division of the U.S. Department of Justice – should tell you that the corruption crisis in America is metastasizing at an unprecedented rate and urgently requires a truly independent National Crime Taskforce. --- ← NYS Regulator Fined Deutsche Bank $150 Million Over Ties to Jeffrey Epstein but Says It Doesn’t Have a Scrap of Paper on JPMorgan and the Sex Trafficker

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