On The Brink with Castle Island - David Thompson (Cooper & Kirk) on What Can be Done about Operation Choke Point 2.0 (EP.412)

Episode Date: April 3, 2023

In this episode I sit down with David Thompson, managing partner at Cooper & Kirk. We cover the emergence of Operation Choke Point 2.0 and what recourse can be sought by the industry. In this episode:  Cooper & Kirk's track record and reputation The story of Choke Point 1.0 and how Cooper & Kirk helped end it How was OCP 1.0 resolved?  Why Cooper & Kirk wrote their recent white paper on OCP 2.0 Differences between Choke Point 1.0 and 2.0  Inconsistencies in FDIC Chair Gruenberg's Congressional testimony Why David thinks that a complaint on due process grounds might be the best option for affected firms  Relevant constitutional protections  How OCP 2.0 might resolve The fate of the SPDIs Possible violations of the Administrative Procedures Act by the Fed How SCOTUS might rule on this issue  Further reading:  Cooper & Kirk: Operation Choke Point 2.0: The Federal Bank Regulators Come For Crypto

Hello and welcome back to On the Brink. Today we're resuming our choke point 2.0 coverage, which we began actually well over a year ago with an interview with David Thompson managing partner at Cooper and Kirk, a DC-based law firm. Cooper and Kirk are no slouch. They're very well-regarded law firm, and they recently wrote a white paper on Operation Choke Point 2.0. they were actually one of the firms that successfully sued over 1.0, and this was a real statement of intent from them, so I strongly recommend you check that out. David Thompson has argued before the Supreme Court, 30 federal district courts, 13 federal circuit courts of appeal. He's covered constitutional litigation covering the first, second, and fifth amendments. We'll get into the relevance of the Fifth Amendment here. This is a really fantastic episode covering the issues with choke point 2.0. and what recourse the industry might have. I'm really excited to get David on.

So let's dive right into it. Hello, welcome back to On the Brink. Today I'm sitting down with David Thompson, managing partner at the law firm. Cooper and Kirk. David, thanks so much for joining us today. Nick, it's a pleasure to be with you. So we've done, we've actually done a choke point two point of series on this podcast already. Starting in 2021, we didn't know what would transpire back then.

things have definitely accelerated in the last few months. We've covered some of that on the show. Obviously, there were significant developments in January, and then we had the collapse of the two crypto-friendly banks just weeks ago. Your firm released a white paper just recently, basically covering all of the provocations in detail, connecting it to chokepoint 1.0, and then looking into possible remedies, what was it that made you perk up your ears and realize that something was going on here? Well, Nick, it's history repeating itself. This is something that about 11 years ago, the Obama administration used their regulatory

powers to target industries that they didn't like. They targeted at first gun stores. And my recollection is that one gun store was targeted for debanking and went to social media and called on everyone in town to pull their door. deposits and there was a liquidity event at the bank and the banking relationship was restored. So they sort of backed off the gun industry, as my recollection, and then turned their attention to the payday lenders and really try to systematically prevent payday lenders from having access to the banking system.

And the reality is, you know, one can debate for any industry, it's pros and its cons, it's not up to the banking regulators, unelected bureaucrats, to decide the fate of industry in America. That's a job for Congress. And of course, even Congress is constrained by the United States Constitution. But unelected banking regulators, they're supposed to focus on credit risk and interest rate risk and liquidity risk, not to pick industries they don't like and target them for punitive action. And so we saw it repeating itself. It's kind of been growing up. going as a crescendo. I know you've been on this topic now for almost a couple of years and rightly so. But when we saw on January 3, the joint statement from the FDIC and the OCC and the

Fed, and then we've just heard it's been picking up steam. And we're hearing from, you know, banking officials and other industry participants that this is real and it's happening. And that's very concerning to us as people who care about the rule of law. I've really devoted my career to trying to keep the federal government and state governments from acting in an illegal way that is inconsistent with the rule of law. So you and the firm brought more broadly, you have a great track record. Tell us a little bit about the cases you've been involved in and what sort of subject matter you normally cover. Well, we're generalists and we do First Amendment cases and Second Amendment cases in property rights and civil rights and separation of powers cases. But one of the light motifs of my

career over the last 29 years has been fighting the banking regulators. It started in the 1980s when there were savings and loans that were insolvent and the banking regulators went to healthy banks and said, here, take over these sick failing banks for us. It was the cheapest resolution for the government and we'll give you favorable accounting treatment. And then Congress came along, actually, in that instance, in 1989, in a law called FIREA, pulled the rug out from underneath our clients overnight, 120 banks, all of which had been very financially stable, were now in peril of going out of business. And many of them did go out of business. And so that case was called United States v. Windstar. It went to the Supreme Court in 1996. And we won, seven to two. And then after

that we were able to recover billions of dollars for our clients who have been victimized. So that was one thing that we've done that's relevant to this situation. Relatedly, we've also been representing shareholders with respect to the nationalization of Fannie Mae and Freddie Mac. And that's been going on now for a decade as well. And that culminated a couple of years ago in a case called Collins v. Gellon that I argued in the Supreme Court. And we got the FHFA, the relevant agency there, declared unconstitutional. And we're now fighting in the lower courts about what the remedy is going to be for that. And then, of course, there's choke point, Choke Point 1.0. And so all of these things, the common theme to them is you have bank regulators

acting in ways that are inconsistent either with the Constitution or with their basic statutory responsibilities and authorities, which are not unlimited. So chugpoint one point out, that wasn't just a cutesy name given to this phenomenon by onlookers. This was sort of the actual government name. You're right, 100 percent, Nick. I mean, this wolf came as wolf. I mean, they, they said, you know, look, we're going to choke these people out. And it was aptly named, right? Because if you're a payday lender or if you're in the digital asset realm, being cut off from the banking system in America today, it's extremely difficult, if not impossible, to actually run a business.

And they know that. And so that's why it's not a surprise that of all the different tools at their disposal, they focused on the banking industry and the banking regulators as the ones to, implement this vision that they had. And look, some of it was benign. They targeted Ponzi schemes. Of course, those are illegal, you know, so fine. But the problem was, then they started picking on some industries that they just didn't like. And, you know, you have one administration that doesn't like payday lenders, and then you have another administration that comes in and isn't going to like something, you know, on the opposite side of the spectrum. And, you know, that's for Congress to

take a look at. And even Congress, of course, isn't unlimited in its authority. But it, it's the right vehicle and the right entity to be making these types of decisions. So what was Cooper and Kirk's role in choke point 1.0? So how did that actually resolve and how are you guys involved in that? Yeah, so we brought a lawsuit on behalf of Advanced America, which was the second largest payday lender in the United States

and the Community Financial Services Association of America, which was their trade association. And our claim was one for a violation of due, due process, as well as a violation of the Administrative Procedures Act. So I'll just lay out those two theories separately for your listeners. Number one, under the due process clause, that protects life, liberty, and here most relevant, property. The government cannot deprive you of your property without due process, which means notice and an opportunity to be heard. And the courts have been very clear that if you have a banking relationship and the government comes in and defames you or

stigmatizes you without notice and an opportunity to be heard and you lose your banking account, that that states a claim for due process. And oh, by the way, it's no defense that, oh, well, you were able to get another banking relationship because obviously those opportunities will, you know, wane over time. And the Supreme Court's been very clear. That's not enough. So that was our due process claim. The government filed what's called a motion to dismiss, saying your legal theory is no good. And the court rejected that. And the court allowed us to take discoveries. That meant we got the internal emails from the government. We were able to put the key malefactors under oath and depose them. And they were denying that they were targeting

the payday lending industry. And what emerged from that was that there were FDIC officials who were writing emails saying, quote, I literally can't stand the payday lending industry. And going on and saying there's no role for them in the banking system. And it was very clear where there was a coordinated, there were FDIC officials who were high level, who were coordinating that attack and were systematically trying to cut the payday lenders off from the banking industry. That also violated statutory responsibilities. You know, in this country, first of all, regulators only have the authorities that are given to them by Congress.

And as we've talked about, banking regulators don't have the authority to cut off whole industries from the banking sector, point one. Point two, even if they are going to make that sort of decision, even if they had that substantive authority, there are procedural rules they have to follow, notice, and comment. The basic idea being in the Democratic Republic, it's bad enough to have unelected bureaucrats making rules and laws. But if they're going to do that,

they need to tell people in the public, here's what we're doing. They need to give the public an opportunity to say, this is why it's illegal or stupid or immoral. And then they are required by law to consider those comments before that rule or law becomes final. And they didn't do that here. They didn't do that in choke point 1.0. They're not doing it here. So we had both these substantive and procedural objections in 1.0.

And one of the things is, you know, Justice Brandeis said sunlight is the best disinfectant. sunlight's the best disinfectant. And so, you know, we really felt like, look, if we can get the facts out, you know, then that will be, you know, very helpful to us. And we were able to get these key emails, key portions of the depositions out, the Wall Street Journal, ran stories on them. I think it was very embarrassing to the FDIC. And ultimately, when the Trump administration came in, we were able to enter a consensual resolution. And because we had the proof that this was going on, and because the Trump administration, did not approve of this. We were able to enter a settlement. And it really did have benefits for the payday lending industry. They saw a relaxation and there were banks. They came back and said, okay, we will start doing business with you again. And we would hope to emulate that success here. So interesting. So when Trump came in, obviously Brian Brooks was his comptroller and I guess I'm saying that wrong, controller. Well, he was the head of the office. He was the comptroller of the currency. And so, you know, Brian was obviously an important figure.

But, you know, we were really the FDIC, although the OCC had some culpability, it was really the FDIC for that choke point. Right. That was running point and being acting in the most illegal ways. And Yelaine and McWilliams came in. And she had grown up in a communist country in Yugoslavia. And so she knows exactly how important the rule of law was. And she thought it was.

patently illegal what was going on. And so she was very sympathetic to the position we were taking. So FDIC chair, Gruenberg, who's currently in office now, was also running the FDIC back then. Did you find that he had any involvement in chokepoint 1.0? You know, he was the chair then and now. I don't know that we had any emails directly from him, but certainly his senior leadership was playing a very active role in chokepoint 1.0, that's for sure. So what I was getting out with Brian Brooks was he proposed this fair access role, I think, towards the end of the Trump administration, which seemed like a reaction at chokepoint, basically saying banks have to consider all industries.

They can't unduly deprive certain industries of banking. I believe day one under Biden that was revoked by Michael Sue. Right. I mean, you know, the Democrat Party likes having the full panoply of regulatory tools to punish the industries they don't like. And that's not a rule of law position, but it is a position where, you know, if you want to have the maximum impact for your policy positions, that's what you should do. If you care about the rule of law and the Anglo-American tradition of law and limits on authority of the government, then that's a terrible way to run a government. So given your track record on this was the purpose of writing the white paper basically to advertise this issue to potential plaintiffs in injured parties and then just have them come to you and say, yeah, we'd like your help here? Well, that may be a positive externality of the white paper. And in fact, that has happened. But really, you know, we just saw this. And it just seemed egregious. And to have history repeating itself right in front of our eyes.

just did not sit right with us. So we thought, okay, well, let's put pen to paper and lay this out in a way that's hopefully persuasive. And given that you were in the mix in both cases, the clamor that's been raised in the crypto space, was there any equivalent noise made around choke point one point O? How do you rate this level of complaining in either case? Well, you know, the reality is I think there are differences.

You know, one difference is you have, I think, a lot more retail investors and candidly even a lot more sophisticated investors. It really runs the full gamut of people who are invested either financially or ideologically or both in the crypto area, whereas payday lending was much more of a niche product. Very few of those companies are publicly traded. So you didn't have shareholders who were upset. So there weren't, you know, it was more a handful of CEOs and companies that were privately held. So I think there's a broader base of people here. You know, unfortunately, then the payday lenders were not politically popular. And I think that's if we're being honest with ourselves.

That's probably where the crypto industry is today. The good news is that we still have judges in this country. And judges take an oath to apply the Constitution and to faithfully follow the law. And what we found in choke point 1.0 is that, you know, the judges did their job, gave us the ability to get the discovery. We believe we would have prevailed a trial if it had gotten that far, but we were able to settle on favorable terms once we had gotten all the discovery and internal emails.

And so the judiciary really worked the way it's supposed to last time, and I think it will this time as well. So the attack this time, as far as I've been able to determine, is multi-pronged. I mean, a lot of people tell me the analogy to choke point 1.0 isn't apt, because they felt that in 1.0 was kind of covert and informal and not very explicit. It wasn't written down in explicit guidance anywhere. Whereas in 2.0, basically the regulators are telling us plainly that they don't like crypto.

I mean, well, yes and no. Yes and no. Let's take a couple of examples. So one of them is Cigna. So Signature Bank has this ledgering system that's very valuable to the crypto industry. and the bank is seized, even though it's not insolvent. And by the way, to my knowledge, in American history, I can't point to a single other bank that was seized and shut down because they had failed to give information.

That's what the state of New York is saying. They didn't give us enough information. That's ridiculous, okay? You know, banks that don't give enough information, they get a cease and desist letter, they get a letter for prompt corrective action. they get a slap on the wrist. They're not seized, okay? So that's the first sign that something was very amiss here.

The second thing is that we hear from whistleblowers, you know, last week, I believe it was, that, hey, they're marketing the bank, but they're not letting people bid on the ledgering system. And by the way, that is massively illegal because when the FDIC takes receivership of an entity, they are a fiduciary to all of the stakeholders. including the shareholders, including the subordinated debt holders, and they have a legal obligation to maximize the value of the assets. And how do you do that? It's by selling them all, not by taking an incredibly valuable asset

and not letting someone bid on it. But the FDIC publicly denies that they are doing this. And then the next day, we get a purchase without the ledgering system being bought, exactly what the whistleblower said. So that would be an example of the sort of secrecy, secrecy, the sort of sneaking around and deception, both in the basis for the takedown, stinks to high heaven, but also the fact that someone won't want to buy this very valuable asset. That just doesn't make any sense. So I think there are, you know, ways in which this is very

similar to the original choke point. I've heard just since I published the white paper from bank officials who are saying, yes, we are secretly being coerced. to take punitive action against the crypto industry. And being punished, basically, is maybe a more precise way of putting, for having done business with the crypto industry. And that's not public. And oh, by the way, something that your listeners need to understand. There's something called the bank examination privilege.

Okay, so this is a doctrine that says the communications between a bank and the regulator are privileged and can't be made public. And that privilege, according to the bank regulators, belongs to them. In other words, they can enforce secrecy over all of these communications. So that is a built-in way in which these informal pressure campaigns, you know, are done in secret. And it's very pernicious. It was interesting. You mentioned the Cignaid Divestiture, FDIC Chair Grunberg testified in the House two days ago, I think.

and completely got his story mixed up. So when Emmer questioned him, he said it had been sold. Yeah, when it hadn't been. It had me, so that wasn't true. Correct. Another representative Garberino questioned him. He said they're in the process of marketing it. Meanwhile, I've had folks reach out to me with knowledge saying they received bids, which

they didn't accept. They don't want to sell it. So neither of his answers was true. I mean, what's the penalty for lying in Congress? Well, that is a felony, perjury. You know, they'd have to prove intent. You know, maybe it's just that doesn't understand. But yes, that that was shocking to me that he would say it was sold when it had not been sold.

Another thing that he said, Amor put the question to him directly, which I'm grateful he did, doesn't seem like there's too many representatives interested in asking these questions, is do banks face any more onerous requests or oversight? if they serve crypto clients? And he says explicitly no. Well, and what I'm telling you is I'm hearing from banks that are saying that's not true. And maybe Grinberg doesn't know it. I mean, I don't know. He's the chairman, whatever. But, you know, that's not squaring up with what we're seeing in the public record and that we laid out in our white paper. And it's not squaring up with what I'm hearing privately. So another question for you, I've talked to numerous bank executives, banks that

serve and don't serve crypto. And they're telling me there's an informal threshold on the number, basically the percentage of assets that they can take pertaining to crypto clients. So they're telling me that it's somewhere in the 15% range that's being messaged to them by the Fed, actually. And so the Fed's basically saying, you can't have crypto as your core business. We saw, you know, Silvergate clearly suffered a little bit because they had a big crypto business. And, you know, those deposits were correlated. And so now the message that banks are receiving is crypto has to be ancillary. It can't be your sort of primary depository base. Is that something that's like permissible to informally message like a threshold for deposits you can take?

I, and they would have to be able to point to some reason why there was actual risk, credit risk, interest rate risk or liquidity risk being the three primary risks. You know, if they had a plausible case about that, sure, okay. But to my knowledge, there are many activities that a bank could engage in that one entail any of those risks with respect to the crypto industry. And they're still taking this hardline, punitive, illegal action. Yeah, one of the things that is the problem there is when you combine your stepped up compliance requirements, which is much more costly if you're servicing the crypto space. I don't think there's any denying that that it's just more expensive for bank to serve crypto because they face these additional requests from regulators.

You combine that, that high fixed cost, with this new requirement that you have a smaller fraction of your deposits pertain to crypto, then it becomes uneconomical as a bank to service crypto. And that's probably not a mistake, Nick. I mean, you know, it's a one-two punch and, you know, the regulators are not stupid. And so I suspect that they're keenly aware of that dynamic. But you're right. It makes it basically impossible to do business.

So there are so many provocations, I would say just since the collapse of FTX, really, but then in full force since January. So you have these cross-agency statements saying that crypto is the rest of the safety insomnia of banks. They say that term over and over, safety insomnia. I don't know what it means, but they keep saying it. You have the collapse of, well, the voluntary liquidation of Silvergate, which you saw prominent senators questioning the integrity of the bank, which I think partly catalyzed the run. You see the seizure of signature, which I think we all can agree is deeply unusual at best.

And now you see whistleblowers talking about these pressure campaigns coming for regulators. You also see the denial of custodia, of vociferous denial, which seems unusual as well. Which of these things perturbed you the most? What was it that made you realize, okay, this is, or is it just the whole pattern of evidence? It's the whole pattern. You know, lightning might strike, you know, once, and it conceivably could even strike twice in the same place, but it's not going to strike over and over and over again in the same place in the same way. And that's what we're seeing, that all of these actions come together

and they're all of a piece with an extreme agenda of trying to zero out this industry, even though they have no legal authority to do so. So one of the things I found most useful in your white paper, given that I know virtually nothing about the law, was the possible recourse or the ways in which these actions are unconstitutional. And I thought you made some really interesting arguments, which I couldn't have conceived of. So first of all, let's talk about due process. So you mentioned this for chokepoint 1.0. Do you think that's kind of one of the strongest claims here that injured parties might have? Yeah, absolutely, because we are hearing that executives are losing their bank accounts. And by the way, I mean, that really stinks to high heaven,

because why would it, will you take action against the CEO of a company in his personal checking account, savings accounts, that doesn't make any sense. That doesn't have any connection to safety or soundness. So that's very suspicious. And we're hearing about industry participants who are losing their bank accounts. And as I said at the top, just because they may be able to go and get another bank account from another bank right now, that doesn't mean that they haven't been injured. And so I think there would be a strong, it's called stigma plus claim, where the government and has stigmatized the industry in the ways that you've just referenced of saying,

oh, it's a threat to safety and soundness. Well, that's stigmatizing. You know, it may be untrue, but that doesn't mean that it doesn't have, and everybody sort of in the banking community understands they're terrified of their regulators. The regulators have enormous authority over them. And so it is absolutely stigmatizing.

The bank, losing a banking relationship is a basis for bringing one of those claims, But there's a second basis for bringing those claims, which is if you're actually put out of business, then that, too, is a due process violation. And we're, you know, beginning to see, I think, some industry participants are in that profile. That's absolutely true. Absolutely true. I can assure you from the entrepreneur VC perspective, we see this happening. And especially firms that have bank charters, applications to bank charters that are withdrawn, or they leave. lose the charter. That's happening right now, too. That's that I, right. I saw for Tago, I think it was. I had to fire all their employees. So, you know, you have, you're seeing both. The bank account,

the debanking of some, that's a violation of due process. And then we're seeing, uh, some industry participants put out of business. And that's clearly a violation of due process. If you're not given notice and an opportunity to defend yourself, uh, to be able to say, look, let's have a dialogue. Tell me where the credit risk. The end. interest rate risk, the liquidity risk is, you know, for many of these companies, as far as I can tell, there is none. So that is certainly part of what we would say. But there's also the Administrative Procedures Act. And as we lay out, you know, the Fed on, I think it was February 7th, went ahead and published a rule. And that hadn't been put out for notice and comment. That's a blatant violation of

the Administrative Procedures Act. So there are a myriad of different arguments that could be made. I like due process because it entitles you to discovery. When you're dealing with the Administrative Procedure Act, you pretty much handed a record and that you have to take the government's versions of the facts as true. And you still can win those cases because, you know, even if their version of facts is true, oftentimes what they're doing is illegal, but it's obviously harder when you have to take your opponent's facts is true. But when you're bringing a due process claim, it's not like that.

You get the other side's emails, you get to put them under oath, and you really get to find out what was actually going on. So one of the things that maybe bothers me the most about this is I started to become extremely concerned in January when all these interagency statements came out, the custodia denial. I wrote a blog post before the collapse of Silvergate or the seizure of signature. And the problem is that the collapse of Silvergate, which I don't think was a suicide, I think partly it was encouraged by precisely these government actions. In fact, I'm certain of that because they voluntarily liquidated. It's not a common thing for banks to do. They felt that they couldn't do business, given the new restrictions that existed on them.

And the stigmatization that had occurred, certainly it was a short-seller campaign. stigmatization attacking their audit firm and attacking their reputation, Elizabeth Warren, other senators, running letters. So, you know, there was some government involvement broadly, I would allege, signature, you know, very suspicious that was seized. Those two failures could be used as evidence, presumably, that crypto is in some way unsafe and unsound. Does that complicate the story here that subsequent to all these warnings from the Fed, et cetera, that crypto is unsafe and unsound that there were these collapses, even if the government had a hand in the collapses of those banks?

Yeah, they might try that maneuver. I think that fortunately for us, the signature bank, because it wasn't insolvent, and they've admitted it wasn't insolvent, and they've said that the reason they took it over was because of the lack of information, and that may be nonsense and untrue. Nevertheless, we can take that, say, okay, look, don't take our word for it. We're going to take New York State's word for it. New York State has said there was not credit risk, there was not liquidity risk, there was not interest rate risk, there was a failure to provide information.

That's not equal to saying that you can't safely have that business model. And so I think we can actually turn it against them and use that as a positive. So one interesting angle that I've been contemplating, and again, I'm not a constitutional scholar, so this is just as a layperson, is the states. So the states, certain states, created specific special purpose banking charters that they were trying to, because, you know, historically in U.S. history, the states have been really important in chartering banking organizations. And you can go through the federal charter or you could go through a state charter. the states have been aiming to give crypto-friendly banks these novel charters, but they've been completely stymied in that. And of course, the custody denial was a big blow against that theory. Is there any notion of like a state's rights claim here coming into play at all?

Well, I never want to say never, but just an initial reaction is I think that could be hard because the federal government under Article 6 of the Constitution is the Supreme Federal law is the Supreme Law of the land. And so it does preempt inconsistent state law claims. And I think also the federal government would probably say, look, you know, take custodia. You know, we're going to allow you to continue to operate under Wyoming law. We're just not going to give you the benefits of having access to a federal banking charter. So I suspect that's what they would say.

But that is certainly, it's a good idea. And it's something that should be looked at. Sometimes the government will preempt the federal government, will preempt state laws without the authority to do so. And so it is a good idea to take a look at that and see if that's going on in this instance. So the APA claim that you mentioned, that pertains to the Federal Reserve statement, which I believe came out on the 27th of Jan,

if I'm not getting that right. And then was entered into the Federal Register on the state. 7th Feb. That's right. Without the notice and comment period. And that statement pertained, I believe that was contemporaneous with the custodian denial. And I think the substance of it was that even state chartered institutions are beholden to Fed rules. Is that fair to say? Yes. I think that's one way of understanding it. Yeah. And so the issue in that case would be that they owe because that was a pretty substantial change, they owed the affected industry a notice in common period as is customary. Exactly right. And they didn't do that. And that's a serious no-no.

But I think it's also, I mean, look, they are smart. They have lawyers. You know, I think it shows they were in a rush to try to put the vice down on the industry because like, why else would they do that? Well, they don't want to delay putting that out. Right. So they made a calculated risk. It's worth it. Maybe we'll get sued. Maybe it'll get thrown out six months from now. But, you know, let's go ahead and, you know, try to take this punitive action now. So if you bring a case, maybe under due process, and we find plaintiffs that are injured, certainly, they exist, and this goes to the Supreme Court, what do you expect? I mean, the Supreme Court is presumably, just from my perspective, they would be receptive to these arguments, you think? I think so. You know, the Supreme Court, this Supreme Court is pretty protective of property rights. They're also don't like it when the government comes in and engages in excessive regulatory outreach and activity. And so here you've got both of those things because at the end of the day, we're talking about private property that's being devastated by this illegal government conduct.

They don't like that. And then we're talking about regulatory access and they generally don't like that. I will say that sometimes in the WinStar case, and this could play out in the Fannie Mae and Freddie Mac litigation, too, that the government, because it relates to the financial industry, you know, sometimes does get an extra measure of deference, but then they'll be forced to pay sometimes for what they've done. Certainly that was true for the savings and loan crisis back in the 1980s. The court said, look, we're going to let you do what you want to do, but we're going to hold you to account financially for having hurt all these people. And so that's sometimes how it plays out. We just don't know whether it would be an injunction or monetary compensation. But we do like our chances. And what can we expect with timelines?

I mean, these things never seem to resolve quickly. Right. You know, I would say that there are three objectives of a litigation. Number one, the mere pendency of a lawsuit tends to force the regulators to act a little less badly. You know, they may not atone for their sins overnight, but, you know, they start to turn square corners if they know, look, our emails are going to be read and we're going to be deposed about what we've said to people. And so that can have a salutary influence just filing the lawsuit. And that could happen soon, potentially. Number one. Number two is we try, this is a public policy fight. This is not just a fight in a courtroom. And so it's important that we get the information and that we make it public, you know, consistent with court rules and whatnot, but that it would come out into the public sphere and that we get stories in the Wall Street Journal and the Financial Times, etc. So that everyone understands, including Congress. And in choke point 1.0, we had a very symbiotic

relationship with members of Congress. You know, they were fighting to get to the truth. We were fighting to get to the truth. We would make information public. They did that. And that really helps so that by the time the Trump administration came into power, we weren't having to educate. They knew about this. They knew we were right. And we were able to get regulatory relief, you know, fairly quickly. And so that's, you know, stage one is the pendency, stage two is to get to the truth and make it public. And then stage three is to try to get an injunction. And you're right. that's not going to happen in the next year or maybe even in the next two years, although it could be in the next two years. But it's not something that's probably going to happen instantaneously.

But it's, you know, it's this multi-phase process to try to get them to curb their bad behavior. So you mentioned Congress. It's interesting. We've already had hearings. The House Financial Services Committee had a hearing on this exact topic. There were some questions in the more recent hearings post-collapse in both Senate and House, pretending to this. I guess during Chuck Point one point out there were champions in Congress. I mean, Luke Meyer, I believe, was a champion. That's exactly right. Like, look, the payday lenders were not

the most sympathetic group of people in the world at that time. By the way, footnote, I think they got a bad rap because the return on equity of their industry is like 1%. And for major banks, it's like 10 to 15 times that, but that's another story. But the reality is, fairly or not, you know, they had a bad reputation among some. And yet there were some, and I don't mean to be too partisan, but they were Republicans. There were some Republicans who thought, you know what, it doesn't matter what their industry is. It doesn't matter whether if I take a poll, people like them or not. What matters is we are a country of laws. We have the rule of law. That's one of the great benefits of the Anglo-American tradition that we have and we squander it at our peril. And so they were willing to stand up and say,

this is not right. And they saw down the chessboard and they thought, you know, if they can shut this group down, are they going to, you know, shut down the pro-life organizations tomorrow and the gun groups the next day and, you know, et cetera, you could see the dominoes and it could be applied just as unfairly on the other side of the aisle. So it's a very dangerous power. And Luke De Meyer did a great job fighting. And we think that there will be members of the House Republican caucus this time round who will say, this isn't right. And you saw that in the Grinberg testimony that he was grilled by at least one member of Congress. Yeah, thankfully we do have champions in particular in the House in senior seats. So that's one of the advantages we have here.

Yeah. I recommend everyone read the white paper. It's really excellent. It certainly helped my understanding. And I'm really excited and I'll be following your work in the space really closely. How would you recommend that interested folks reach out and get touch. Well, look, Nick, I think you've been a leader in this area, and I'd encourage them to reach out to you. If you don't mind, they could reach out to me either, but, you know, whether it's you

or me, we want to hear from industry participants who have lost bank accounts. We want to hear from industry participants who have been forced out of business. We want to hear from bank officials, and we will not use their names in public filings. But it's very helpful to us to get this confirmation that, you know, this is in fact happening. And then that allows us to go into court and to allege it, not just on information and belief, thinking that maybe it's happened, but knowing, in fact, this is happening.

And that gives us a lot of credibility with the court. And so I'd encourage anyone who has knowledge about it to send it to you and you can send it to me or they can contact me directly. But that would be helpful because we are trying to really get to the bottom of this and end this illegal campaign. Well, David, this is incredibly important work. So thank you so much.

Thanks for joining us today. Well, thank you, Nick, for having me. I really appreciate it.