August 20, 2025 • 43 mins
Lawyer Richard Hoeg explores the legal complexities surrounding an executive order on fair banking. He clarifies misunderstandings about US government branches and examines challenges in implementing objective banking standards. The episode explores the concept of politicized debanking, its implications, and the roles of federal regulators and the SBA. Hoeg discusses legislative and regulatory responses, the SBA's 7(a) loan program, and FTC Act Section 5's implications. He addresses legal challenges to FTC authority and executive order limitations, concluding with Steam's response and broader legal implications.
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Episode Transcript
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(00:14):
Hello, and welcome to another episode ofVirtual Legality.
I'm your host, Richard Hoag, managing member ofthe Hoag Law Business Law Firm of Northville,
Michigan.
And today, we're diving once again into thestory about payment processors, the financial
infrastructure systems, and video games insofaras they are preventing video game purveyors
like Steam and itch.i0 from selling adultfacing content that is otherwise legal in the
(00:36):
jurisdictions that we're talking about, inparticularity, The United States.
And in also particularity, we're gonna talkabout an executive order today that was signed
by president Trump that has been described, asyou can see on your screen right now, by some
as essentially destroying the paymentprocessors and what it is that they've tried to
do by encouraging steam and itch.i0 to get ridof these products and services.
(00:57):
Now as lawyers are won't to do, I'm here invirtual reality to pour a bit of cold water on
this particular notion that the paymentprocessors, the financial industry on the
whole, is somehow screwed, as this particularthumbnail puts it, or destroyed by the notion
of an executive order signed by presidentTrump, or at least this particular executive
(01:17):
order that we are about to read as part of thisvideo.
And I also wanted to bring up another tweetthat I saw from a commenter called Vera Dark.
And, again, if you're in Virtual Galley for thefirst time here, I don't endorse any particular
readings of anything that I'm looking at when Italk about them in this space, but there are
folks on Twitter, on social media that aremaking commentary like this one.
(01:37):
I found it particularly useful to dive intothat I think are a little bit wrongheaded.
Not that there's anything wrong with taking acrack at evaluating these things on your own.
I highly recommend it for anybody that'swatching or listening to this show.
But in this particular case, we can take whatVera says here, and we can analyze it as part
of this video and see how she misses the mark alittle bit.
(01:59):
As she puts it, this executive order came downtoday, and it clearly states banking services
can't be denied because of protections providedby the constitution of The United States.
That seems to be implying the first amendmentfreedom of expression issues that we've talked
about as part of this series.
It mentions companies have a hundred and eightydays to remove any provisions from their terms
of service that mention reputational damage tothemselves due to the fact that they must
(02:20):
provide all lawful citizens with bankingservices.
Now that's a misunderstanding of what thisexecutive order is going to do.
We're going to dive into that as part of thisvideo.
Companies like Visa, Mastercard can no longerdeny payment for something that, in their
opinion, lacks artistic value, but is legal inThe US.
And that goes too far with what this executiveorder says as well, which Valve had pointed to
their rule that outlines the sales of productsor services that are, quote, unquote, patently
(02:44):
offensive and lack serious artistic value orany other material that the corporation deems
unacceptable to sell in connection with theirmark, their trademark, as a violation of the
rule that they put forth.
That's a reference to the Mastercard rule wesaw cited by Steam and that we discussed in the
prior video in this series.
Ultimately, creators can't have funding sourcesripped away from them over political opinions
(03:04):
deemed damaging.
And so I wanted to highlight this commentarybecause this is the same kind of comments that
I saw online so often with respect to thisstory, and I think it goes too far.
It's incorrect in important ways that I thinklead people to believe that, one, this fight is
over when it very much isn't.
That if you care about these things, if youcare about Visa, Mastercard, PayPal, or
(03:25):
whomever forcing Steam and itch.i0 to not sellwhat those services want to sell to you and
which are legal in the jurisdictions we'retalking about, then you have a continuing fight
to engage in on this particular topic.
But, also, I just wanted to talk about what anexecutive order actually is, what it isn't, and
so we can better understand what it is thatpresident Trump or any other president in The
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United States or any other jurisdiction isactually capable of doing on this score with a
method like an executive order.
So on that note, please hang in there.
We're gonna get into the weeds on this.
But before we do, I wanted to mention that thischannel is supported by viewers and listeners
like you through Patreon, through membershipsand super chats, and other things that you can
do to tell Google that you are enjoying thiskind of commentary.
(04:09):
Also, among those things are leaving comments.
This particular topic tends to rub thealgorithms of the world the wrong way because
we're gonna say words that the algorithms don'tlike when we talk about these things.
And as I said in my prior video, we're notgoing to restrict ourselves from saying those
words.
I find it anathema to talking about censorshipby only censoring myself to using words that
the algorithm approves of.
(04:30):
So please do leave comments, leave likes, leavedislikes, whatever it is that actually touches
Google and YouTube's buttons.
It really appreciates that.
It seems to let these videos be seen fartherand wider than they would be without that
process.
So if you're interested in these types ofconversations and you find them useful, please
do leave a comment.
I also try to read those as much as I can andget to answers of questions that people have in
(04:52):
those comments as well.
So please do consider that.
Now as I said, we're gonna get into the weedshere.
And as I promised, we're gonna get into theweeds on a legal basis as this is a legal
facing YouTube channel.
So the first thing we need to understand iswhat an executive order is.
So I've highlighted here the three branches ofthe US federal government.
I assume for most United States listeners andviewers that you got some version of this in
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elementary school, but we have a lot ofinternational viewers and listeners on this
channel, and I wanna make sure that we're clearon what is and isn't happening here.
So I've put three boxes on your screen, onelabeled judicial, one labeled executive, and
one labeled legislative to show the threebranches of the US government.
Now we call these coequal insofar as they havechecks and balances and things that they can do
(05:37):
and can't do and fight against each other incertain ways.
They aren't necessarily equal in everyinstance, but it is a useful kind of rubric to
think about that the judicial executive andlegislative can't really do everything that the
US federal government wants to do on any givenissue.
And to underscore that a little bit more, I'vehighlighted what it is that we're talking about
here and what it is that they do and don't do.
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So on your board right now, you see executivebranch in blue.
That's the branch that is going to be issuingan executive order.
That's the president of The United States.
And I've highlighted here that his job isenforcer.
He enforces the laws, and he sets enforcementpriorities through things like executive
orders.
He tells the executive branch what he wants tohave happen in the enforcement of laws, but he
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doesn't write those laws.
Who writes the laws?
The legislative branch writes those laws.
They are the rules maker.
They are the ones putting forth what the publicpolicy of The United States actually is.
You'll hear newsmakers talk about the fact thatthe president sets public policy.
That's true insofar as he asks the legislatureto do things for him.
It isn't true when we're talking aboutexecutive orders like the one we're about to
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talk about today.
The legislative are the ones that evaluate whatthe problems of the country are, determine what
the public policy of the country should be, andrights laws around that public policy.
The executive then goes to enforce those lawsas written by the legislative, but they are not
the final arbiter of whether a law has beenbroken.
They go to enforce them by maybe bringing anaction in court, and then the judicial branch
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actually interprets what the law says anddecides the cases and controversies before it.
So, yes, coequal branches doing differentthings, but what's important about this story
is that an executive order is not a law.
It is a set of enforcement priorities that onlygovern the executive branch itself.
So your first takeaway when you're talkingabout this issue with others, online or
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otherwise, is that executive orders govern theexecutive branch.
The executive branch is huge.
It's multi thousands of people, agencies allover the place.
We've talked about a lot of them here invirtual legality.
An executive order says, alright, agency.
I want you to think about this issue this way.
I want you to enforce it in this manner, but anexecutive order does not control the citizenry.
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It does not control the judiciary.
The executive branch can say, this is what Ithink this law says, and this is how I want you
to enforce it.
The agencies can take that under advisement anddo what the president asks.
That's what they're supposed to do in theexecutive branch, but that doesn't control what
the court might say the law actually says.
It's just one person's evaluation of what itsays, and they don't have the power.
They don't have the authority to evaluate thatfor all the citizens of the country.
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So we'll talk about that as we go on in thisvideo, but the judiciary is going to have an
important role to play in whether or not theexecutive order we're about to read can even
take effect to the extent that the presidentseems to be advocating it too.
So as we dive in here, in the guaranteeing fairbanking for all Americans executive order
issued on 08/07/2025, we'll see certain areasin which the presidency and the executive
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branch on the whole maybe try to steal a base,maybe go a step further than an executive order
really allows them to do, and the courts arenot always gonna look to so kindly upon that.
That's our first kind of commentary.
Executive orders cannot control the citizenry.
They cannot actually order Mastercard or Visaor PayPal or anyone else to do anything.
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What they can do is tell the people thatalready work in the executive branch, the
agencies and whatnot, what it is that thepresident wants to see them do.
So first, we start out with what we might callrecitals in a legal document here where we
establish what the problem is.
We talk about what issue we're trying toaddress with this executive order.
Section one, purpose.
Financial institutions have engaged inunacceptable practices to restrict law abiding
(09:21):
individuals and businesses access to financialservices on the basis of political or religious
beliefs or lawful business activities.
So first and foremost, we see here that thepurpose is to address financial institutions
engaging in what the president deems to beunacceptable practices.
Financial institutions are not what we'retalking about necessarily with respect to the
video game situation.
(09:42):
We're talking more about the processors, thepeople that allow the money to move between
banks rather than the banks themselves, thefinancial institutions on the whole.
We also note in this first sentence that thefocus appears to be on political or religious
beliefs even though lawful business activitiesare also included in the second category.
So we already have a concern that this isn'taimed directly at what we'd want it to be aimed
(10:04):
at, which I will spoiler spoiler alert for youhere, it is not.
Some financial institutions participated ingovernment directed surveillance programs
targeting persons participating in activitiesand causes commonly associated with
conservatism and the political right followingthe events that occurred at or near The United
States Capitol on 01/06/2021.
Here again, we say, uh-oh.
(10:25):
Alright.
So this executive order is really concernedabout debanking.
Right?
It's really concerned, as the headline says,making banking fair for all Americans, but it's
really concerned about that from the conceptthat the banks, the financial institutions of
the country were erroneously surveilling andotherwise harming people that were associated
with conservatism and the political right.
(10:46):
Now I don't know how you choose to characterizeSteam and itch.io getting rid of adult games on
their services, but I don't think that that isa step taken by Steam or Itch to specifically
advocate for conservatism or the politicalright.
In fact, the most common refrain in terms ofarguing against these particular censoring
activities is that conservatives in thepolitical right are the ones at Collective
(11:10):
Shout, the advocacy group that has moved forsome of these actions to take place.
And so if anything, steam and itch trying tofight the payment processors on this are
advocating for a more liberal kind of conceptin terms of what they should be allowed to
sell.
So if this executive order were limited only totelling banks that they can't harm
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conservatives and the political right, we wouldlook at this and say that's a really difficult
case to make for Steam and Itch against Visa,Mastercard, PayPal, or whomever.
But that's not all this says, so we cancontinue to read on.
The federal government suggested that suchinstitutions flag individuals who made
transactions related to companies like Cabela'sand Bass Pro Shop or who made peer to peer
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payments that involved terms like Trump orMAGA, even though there was no specific
evidence tying those individuals to criminalconduct.
So here, we see that the issue that thepresident poses in this purpose section is that
banks were debanking people for saying nicethings about, right leaning politicians or
politics, and also that the federal governmentwas taking an extra step in suggesting to banks
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that they debank folks that shopped at placesthat might otherwise reflect conservative or
right leaning political views.
And I think it's easy enough to look at thissituation and say, alright.
If that is in fact the case, if that is in factwhat happened, then this seems appropriate to
say, banks, you shouldn't be doing that.
We already talked about payment processorsbeing essentially infrastructural common
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carrier type entities.
Banks, certainly in 2025 and the twenty firstcentury on the whole, digital banking and the
economy on a global basis are that same kind ofinfrastructure piece of the economy.
And so this all makes sense.
And so far as it is written here, we don't havethe kind of evidence to suggest this actually
happened in the way it is stated here in thepurpose section, but that's not what an
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executive order does.
So we press on.
Bank regulators have used supervisory scrutinyand other influence over regulated banks to
direct or otherwise encourage politicized orunlawful debanking activities.
Quote, unquote, operation chokepoint, forexample, was a well documented and systemic
means by which federal regulators put pushedbanks to minimize their involvement with
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individuals and companies engaged in lawfulactivities and industries disfavored by
regulators based on factors other thanindividualized objective risk based standards.
So here, they're saying, okay.
The federal government in the past had anoperation, quote, unquote, operation choke
point that said, we're gonna push you to debankfolks that we don't find terribly helpful to
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our political cause, and that the banks didthat, other than for reasons based on risk.
Now I highlighted in this discussion other thanindividualized objective risk based standards
because this is the kind of concept thatprobably needs a defined term, probably would
need in a law a specific section talking aboutwhat we mean by this term.
We can understand it intuitively as somethinglike, alright, bank.
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You can look at somebody's income level.
You can look at what they they do with theirmoney, and you can say, I don't wanna make this
loan.
I don't wanna allow this banking servicebecause I feel like you are more likely to
default on your loan or your checking accountor what have you.
And if we can make that kind of actuarialargument, then we can otherwise not work with
you, and we have to be able to do that becauseotherwise we can't stay in business.
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But just saying you shop at Cabela's is notsomething that we think would otherwise
indicate a higher level of risk for loans orchecking accounts or otherwise.
And so if you were doing this on some otherbasis, then we've got a problem.
The issue with this from the perspective of thestory we're talking about is that the
Mastercard rule we mentioned in the prior videoessentially says Mastercard can look at a
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situation and say, this increases our corporaterisk.
It can be economic.
It can be reputational.
It can be any of these things.
And if it so increases that risk, we can tellyou we might be concerned about this.
And as we also talked about in that priorvideo, Mastercard itself doesn't necessarily
have to say anything when its financialpartners can be told that this rule exists, and
they can put the the push down on Steam or Itchor anyone else that says Mastercard might have
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an issue with this.
And then Steam adds a rule that says, okay,developers.
Don't add anything to our service that's thatMastercard might have an issue with, which is
obviously an impossible situation forMastercard.
It's an impossible situation for the devs.
It's an impossible situation for Steam.
But that's where we exist right now, none ofwhich necessarily speaks to anything that isn't
an individualized objective risk basedstandard.
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So we already have our first issue with kind ofvagueness here, which is to say, alright.
If that's the basis you're going to use foryour rule, and spoiler again, it is, then we've
got an issue with these payment processors oreven these banks being able to say, well, look.
That is an individualized objective risk basedstandard.
We don't wanna work with incest porn videogames.
We think that increases the likelihood thatSteam or its users are gonna cause a problem
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for us either reputationally or economically.
And so that's a legitimate business interestthat we have.
And so go away executive order.
We're not really concerned about any of this.
Continuing, as a result, individuals, theirbusinesses, and their families have been
subjected to debanking on the basis of theirpolitical affiliations, religious beliefs, or
lawful business activities.
And you see that last category is what we'retalking about because I don't really believe
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that the sales of video games on Steam or Itchare politically affiliated or religious beliefs
and have suffered frozen payrolls, debt, andcrushing interest, and other significant harms
to their livelihoods, reputations, andfinancial well-being.
Such practices are incompatible with a freesociety and the principle that the provision of
banking services should be based on material,measurable, and justifiable risks.
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I e, again, we don't have a problem with youcoming to the conclusion that somebody is a
risk to your loan portfolio.
You don't wanna issue them money.
We're not going to mandate that you otherwiseloan things to people or otherwise open
checking accounts for everybody that walks inyour door, even though the federal government
does that in certain important respects.
They further undermine public trust in bankinginstitutions and their regulators, discriminate
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against political beliefs and free expressionof those beliefs, and weaponize a politicized
regulatory state.
Policy.
It is the policy of The United States that noAmerican should be denied access to financial
services because of their constitutionally orstatutorily protected beliefs, affiliations, or
political views.
Now the first part of that sentence sounds likewe're aimed directly at what we're talking
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about.
Right?
Mastercard, Visa, PayPal, whomever, arguingagainst Steam and Itch being allowed to sell
what they are otherwise legally allowed tosell, and that might be its own issue.
But, again, comes the concept that wehighlighted at the top of this, that what we're
really concerned about if we are the executivebranch of the United States are actions that go
against beliefs, affiliations, or politicalviews.
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It's very difficult for me to imagine Steam orItch arguing that their sales of these games
qualify for that, except on the broadest basisof we should have the freedom to sell whatever
we want.
Banking decisions must instead be made on thebasis of individualized objective and risk
based analyses.
Definitions.
The term politicized or unlawful debankingrefers to an act by a bank, savings
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association, credit union, or other financialservices provider to directly or indirectly
adversely restrict access to or adverselymodify the conditions of accounts, loans, or
other banking products or financial services ofany customer or potential customer on the basis
of the customer or potential customer'spolitical or religious beliefs or on the basis
of the customer's or potential customer'slawful business activities that the financial
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service provider disagrees with or disfavorsfor political reasons.
So a lot to unpack there.
Obviously, that's full legalese.
We're getting into the law part of this entireconversation, but let's start unpacking.
First, we note that what we're really talkingabout here at the top of this definition are
banks.
Right?
This is the debanking executive order.
This isn't really about payment processing atall.
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Although, the definition is written broadlyenough to grab what we're talking about with
respect to processing credit card payments intoSteam or Itch or anyone else.
Right?
We can read this to just point directly atother financial service providers, restricting
access to financial services, and say, yep.
That hits what we needed to hit from what we'retalking about as part of this conversation.
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But we have to note, as certainly Mastercardand Visa and anybody else would note in reading
this, that this is not aimed at us.
This is aimed at banks.
This is aimed at debanking.
Furthermore, it's aimed specifically atdebanking for political or religious beliefs
and only really restricts us from doing thingsthat harm people's lawful business activities
if we did it because we disfavor thoseactivities for political reasons.
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Now it's easy enough to get out there on thestreets and argue that what Visa and Mastercard
are against here are things that are lewd orthings that are something that don't agree with
their political affiliations as companies.
But it's more difficult to see them disfavoringthese things as political reasons from a
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conservative versus liberal perspective oranything that we might consider politics
outside of the overall everything personal ispolitical kind of concepts, which is not what
the law aims at.
It's not what this language aims at.
So are Visa and Mastercard doing this to steaman itch for political reasons?
You'd have to make a pretty narrow argument,and certainly Visa and Mastercard would make
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the opposite argument.
They're doing this because of the brand damagethey think would happen with respect to their
brands if they allowed these things.
And if it came down to it, they're doing itbecause we think that services that provide
these types of products to their customers aremore likely to default for some reason that we
could probably make with the copious amounts ofdata at our fingertips if we're Visa,
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Mastercard, PayPal, or anyone else in thefinancial processing arena.
So we've got issues with the definitions there.
We do note again that it's just not aimed atwhat we want it to be aimed at.
So when we talk about the commentary that wementioned at the top of this video, it has to
be part of the conversation that this executiveorder not only just controls the executive
branch and not the Visa and Mastercards of theworld, but also isn't really aimed at this
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particular issue.
It's aimed at an adjacent issue, which mightwell be applicable to the issue that we're
concerned about when we talk about it invirtual legality.
But as it not being aimed directly at it, wouldbe fairly easy for the payment processors in
this particular story to skate around.
Now the term federal banking regulators, asstated in this executive order, refers to the
Small Business Administration, SBA, and thefederal member agencies of the Financial
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Stability Oversight Council with supervisoryand regulatory authority over banks, saving
associations, or credit unions.
So looking at this, like we mentioned at thetop, executive orders can only control the
executive branch.
This executive order is aimed at federalbanking regulators.
It is aimed at telling the SBA and the otherfederal member agencies that otherwise license
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the banks in The United States, and I'm gonnashorthand this considerably.
So if you're a lawyer in the credit industryand you're in the comments, you can let the
folks know exactly how much my shortening hasmissed the message of what it is that federal
regulators regulators do in the bankingindustry.
But these are the folks that license banks, ifyou don't do what they say, if you don't
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operate in the way that they tell you, then youcan lose your ability to perform banking
services in The United States.
And so they're very important regulators, inthe country, but they are the only bodies that
president Trump has the authority to kind oforder around in a manner like this one.
Sec section four, removing reputation risk andpoliticized or unlawful debanking.
Now this is the section that we saw thecommentator Vera talking about earlier,
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suggesting, as she did, that it mentions thatcompanies have a hundred and eighty days to
remove any provisions from their terms ofservice that mention reputational damage to
themselves.
That's not what's happening in this section, solet's see what is happening.
Within a hundred and eighty days of the date ofthis order, each appropriate federal banking
regulator shall, to the greatest extentpermitted by law, remove the use of reputation
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risk or equivalent concepts that could resultin politicized or unlawful debanking, as well
as any other considerations that could be usedto engage in such debanking from their guidance
documents, manuals, and other materials.
So what that says is that the people under mypurview, if I'm president Trump, will take out
of their recommendations for how to comply withour rules and regulations that you can use
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reputation risk or equivalent concepts in yourmaterials because, according to president Trump
and his executive branch here, that allows fortoo much leeway for you to start debanking
people on political grounds.
But what he doesn't do, what he can't do, whathe doesn't have the authority to do is tell
Visa and Mastercard that they can't have thatrule in place.
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He can tell his regulators to say that's not arecommendation, and maybe we'll penalize you.
We'll see that a little bit further on in theexecutive order, but he can't tell them what to
do.
They are the citizenry.
They are outside his purview in this context.
That's why when we have major issues in TheUnited States, when other folks have major
issues in their jurisdictions, I always tellyou, you can't depend on the executive order
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process.
You have to actually pass laws.
This was not that controversial not so longago.
But if you wanna fix things on a policy basisin the country of your choice, you actually
have to go and get whatever version of therules that are passed by your representatives
in the books more than you have to getexecutive orders and kind of policy
preferences, established by the executive herein The United States.
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So that's what this actually says.
Then we note the parenthetical, which is superimportant here.
We just told you that you should remove allreferences, reputation risk, other than exec
existing regulations or other materialsrequiring notice and comment rulemaking.
Now notice and comment rulemaking is how rulesare made by regulators in The United States to
comply with the Administrative Procedures Actthat we actually have to post when we're gonna
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do something serious, and we have to takecomments from the public.
And then only after certain time frames havebeen passed can those rules go into effect.
So those are the important rules.
Everything else is just guidance documents,manuals, other materials in this particular
rule.
Those aren't that important to how a bank isactually licensed.
They aren't important to how the countryactually operates.
They are important insofar as if you're runninga bank, you wanna comply with the regulator
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that's breathing down your neck to do variousthings.
But the things that aren't going to change as apart of this executive order are the things
that have actually gone through the formalprocess of notice and comment rulemaking.
So we're already talking about a thinner sliceof everything than what we would have been
talking about without this context, but this isthe executive or his lawyers essentially saying
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you can't actually ask for anything that goesbeyond these kinds of opaque, somewhat middle
of the road documents described here asguidance manuals and other materials.
And so you can't take out the real rules.
You can only take out the kind of slightunwritten type rules that these regulators are
otherwise using.
The federal banking regulators shall alsoconsider rescinding or amending existing
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regulations consistent with applicable law toeliminate or amend any regulations that could
result in politicized or unlawful debanking andto ensure that any regulated firms or
individuals' reputation is considered forregulatory supervisory banking or enforcement
purposes solely to the extent necessary toreach a reasonable and apolitical risk based
assessment.
So this is the kind of umbrella concept.
(26:24):
Look, regulators, you'll also considerrescinding.
I'm not actually going to order you to rescind,but you'll consider rescinding anything that
you find that might otherwise create this grayarea that would allow you to debank on a
political basis.
Now that's obviously very broad, but just likeevery other aspect of this story, the agencies
themselves, the federal regulators themselves,are going to have a certain amount of leeway
(26:47):
themselves to determine what it is to complywith an order like this one.
And, certainly, this is weak language on itsface.
The SBA, the Small Business Administration,shall within sixty days of the date of this
order give notice to all financial institutionswith which it guarantees loans under its
lending programs, requiring that each financialinstitution that is subject to the SBA's
jurisdiction and supervision within a hundredand twenty days of this order make reasonable
(27:11):
efforts to identify and reinstate any previousclients of the institution or any subsidiaries
denied service through politicized or unlawfuldebanking action in violation of a statutory or
regulatory requirement under section seven a ofthe Small Business Act or any requirement in a
standard operating procedures manual or policynotice related to a program or function of the
Office of Capital Access with notice of thereinstatement sent to the victim.
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So a lot of legalese again.
But what this says is that the SBA and all thebanks that operate with SBA loans that are
guaranteed by the SBA will tell the banks thatit's affiliated with that they will make
efforts to go and figure out whether they'vedone any debanking that would violate the
concepts here in this executive order.
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But because the executive order can't set laws,they actually have to point to rules that might
have been violated by this debanking.
And so they point to section seven a of theSmall Business Act, and they point to operating
procedures, manuals, and policy notices thatare, again, in that kind of unwritten rules,
not quite rule and comment rulemaking typedocumentation, and say those are violations.
(28:17):
And so you will go and you will fix thesethings, institutions which we are affiliated
with at the SBA.
Now the biggest issue here is as we've alreadytalked about, the executive branch is not the
judiciary.
So you can make an executive order and say,alright.
We think this is a problem, and we think thatdebanking in this fashion is illegal in some
(28:37):
important way.
But you, people that are operating the bank,people that are operating the payment
processor, the other financial servicescompanies might disagree.
Right?
This is actually saying you will go and youwill identify anybody that you debanked in
violation of these rules.
Surely, you didn't think that you were doing itin violation of the rules when you did it only
a few years ago.
And part of the overall recitals portion ofthis document suggested that the government
(29:02):
itself was encouraging banks to do this thing.
So you didn't feel it then.
You probably don't feel it now.
If you don't feel like you're in violation forwhatever it is that you did in the past, then
this doesn't do anything at all.
Right?
The SBA says, alright.
Go flag for your us the people that you didthis to, and you say, well, we're not we're not
bad people here at Bank x.
We didn't do this at all.
There was no violations of section seven a ofthe small business act.
(29:25):
That's the loan guarantee program.
We don't know exactly what's in the rest of theoperating procedures manual or policy notice,
but probably very similar.
And so we don't think we violated any rules.
So thank you, SBA, for contacting us with this,but we don't think we have to tell you about
any victims as you so nicely frame it in thisdocument.
In addition, the SBA will say within onehundred and twenty days of the date of this
(29:47):
order, you have to identify all potentialclients denied access to financial services,
through a politicized or unlawful debankingaction in violation of the things we just
talked about.
And within a hundred and twenty days of thedate of this order, you identify all potential
clients denied access to payment processingservices provided by the financial institution
or any subsidiaries through a politicized orunlawful debanking action with the same
(30:07):
violations.
Right?
So you will go and you will make lists for usof all the people you screwed over on this
basis, and then we will do something about itafter the fact.
But, again, these banks aren't otherwise gonnabe bound to find that there was a violation of
this type.
The president can't order them to find aviolation.
He can only kinda tell his regulators what he'slooking for, and the regulators can go and
(30:29):
communicate that, and they can certainly presson some of these banks if they feel they're
being untruthful on these questions.
But it is an attenuated process that doesn'tnecessarily lead to anything at this point in
time.
Section five, scrutinizing, politicized, orunlawful debanking.
Within a hundred and eighty days of the date ofthis order, the secretary of the treasury, in
consultation with the assistant of thepresident for economic policy, shall develop a
(30:51):
comprehensive strategy for further measures tocombat politicized or unlawful debanking
activities of financial regulators andfinancial institutions across the federal
government, including consideration oflegislative or regulatory options to eliminate
such debanking.
Legislative options there being, includingseeing if congress is willing to pass a law on
this.
Regulatory options would be changing ruleswithin our in house executive branch offices,
(31:13):
which can, of course, play a major factor inhow banks actually operate because they are
fully regulated institutions in The UnitedStates.
But this is where the actual rubber hits theroad.
We're gonna see if we need to do something moresignificant than this.
This is the first step of potentially many orpotentially the last step of no further steps
on this particular topic.
(31:35):
And so the executive order should not be seenas screwing or destroying anyone.
And I know YouTubers and influencers andcommenters are are used to kind of making
headlines like that.
But my job here, as I see it, is to tell youwhat the truth of the matter that I can see in
these stories actually is.
And in this particular story, this executiveorder is perhaps the weakest starting point
(31:58):
that you can have for this, but you can stillcelebrate the win if you're so inclined as the
federal government in The United Statesactually being concerned about these kinds of
things.
But we have no indication that they areconcerned about the things that we are
concerned about with respect to video games andmedia and the payment processors throwing their
weight around on that score as it stands thisminute.
(32:19):
Within a hundred and twenty days of the date ofthis order, each federal banking regulator
shall conduct a review to identify financialinstitutions subject to its jurisdiction that
have had any past or current, formal orinformal, policies or practices that require,
encourage, or otherwise influence suchfinancial institution to engage in politicized
or unlawful debanking and to take appropriateremedial action to the extent authorized and
(32:41):
consistent with applicable law, includinglevying fines, issuing consent decrees,
imposing other disciplinary measures againstany financial institution subject to the
jurisdiction of such banking regulator, thatthey were engaged in this unlawful activity,
including reference to section five of theFederal Trade Commission Act, section ten
thirty one of the Consumer Financial ProtectionAct, and the Equal Credit Opportunity Act.
(33:03):
So here he points to laws.
Right?
And this is important because as I saidearlier, they are not the final arbiter of when
a law has been violated.
So we have to look at a few things.
First, we'll look at section seven a of the SBAor more particularly how the SBA describes its
seven a obligations so that we just understandwhat we're talking about with respect to those
SBA obligations.
(33:23):
The seven a loan program is the Small BusinessAdministration's primary business loan program
for providing financial assistance to smallbusinesses, but the SBA doesn't loan out the
money directly.
Instead, what the seven a loan program is isthe federal government guaranteeing repayment
of loans to lenders.
So you go to your bank.
You're a small business.
You say, need $5,000,000, and the bank says,well, based on what you've got in place, that
(33:48):
doesn't make any sense to us.
You're too high of a risk, and the federalgovernment goes and subsidizes these lenders.
They guarantee the repayment of these loans tothose lenders if they qualify under certain
application type documents for purposes of anSBA guarantee.
And this is one of those things that I do alot, in my line of work.
I have a lot of small businesses.
I have a lot of founders that are looking forcapital.
(34:09):
And the SBA loan program determines exactly howyou are going to go and file for a loan with
your local bank.
And this is one of those things where the SBAhas a major part to play in the economy of
small business in The United States, but theydon't actually give out the money themselves.
They simply guarantee the repayments, to thefinancial institutions.
(34:31):
The maximum loan amount for a seven a loan is$5,000,000.
Key eligibility factors are based on what thebusiness does to receive its income, its credit
history, and where the business operates.
But importantly, as I just mentioned, theydon't provide the loans directly, although they
can help with the process because they're theones that put the rules in place.
So that's a seven a loan.
You could see how the executive branch says,alright, SBA.
(34:52):
Go tell the banks that you've otherwiseguaranteed that they have to be in compliance
with this executive order if they wannacontinue to work with the SBA.
That's how an executive order works.
Going a little bit further, let's talk aboutthe FTC because one of the things that was just
called out was section five of the FederalTrade Commission Act.
This document here is a congressional researchservice document that is designed to be given
to congresspeople to inform them of what'shappening in various aspects of the law.
(35:17):
This was done about the FTC in section five.
It says in addition to enforcing severalspecific laws, the agency enforces section five
of the Federal Trade Commission Act against allUS persons, partnerships, and corporations
subject to a few exceptions.
Section five identifies two categories of actsunder FTC's enforcement authority, unfair or
deceptive acts or practices in or affectingcommerce, and unfair methods of competition.
(35:39):
The first of these provisions, frequentlyreferred to as the UDAP provision, provides the
basis for many of the FTC's consumer protectionactions when the agency lacks more specific
statutory authority.
Section five does not, and this is important,define unfair or deceptive acts or practices.
So the Federal Trade Commission, recently, inrespect of non competition agreements in The
(36:00):
United States, can go and say, we think thatthis particular behavior of business in the
country is unfair or deceptive.
And then they can go and issue guidance onthat.
They can even bring enforcement actions,lawsuits against people they think violate
their rules.
The agency, as described here in thiscongressional research service document, said
they may issue policy statements or guidance.
(36:21):
They may issue rules defining practices asUDAPs.
The agency may pursue enforcement actions, as Ijust mentioned.
But, again, importantly, when we're talkingabout section five, although they will assert,
as they did in November 2022, that they havebroad authority to name anything like
noncompetition agreements as unfair ordeceptive, we will find as we look further in
(36:42):
these stories that they run into trouble whenthey do so.
Federal court issues nationwide injunctionblocking FTC noncompete ban.
And this is as of August 2024.
This whole concept is still proceeding throughthe courts.
But as we saw earlier in virtual reality withrespect to Microsoft and Activision, the FTC or
any other agency of The United States can sayyou're in violation of the law, but they aren't
(37:04):
the ones that finally get to decide that.
That is the court system.
And so when the executive goes and tells hisagencies, that they should consider whether or
not a debanking action would violate sectionfive of the Federal Trade Commission Act, then
they can make that determination, but they'restill not over the over the hump, out of the
(37:25):
woods in terms of actually winning that case ina court of law in The United States.
So we're still many steps removed, many stepsattenuated from actually saying Visa and
Mastercard, it's time to shake in your boots onany of this.
Within a hundred and eighty days of the date ofthis order, the federal banking regulators
shall review their current supervisory andcomplaint data to identify any financial
(37:45):
institution that is engaged in unlawfuldebanking on the basis of religion.
And then they'll find that if they are unableto obtain compliance within the meaning of this
specific act under The United States code, adifferent law, they will refer the matter to
the attorney general for appropriate civilaction.
General provisions.
The authority granted by law to an executivedepartment or agency has not otherwise been
(38:06):
impaired.
This order is not intended to and does notcreate any right or benefit, substantive or
procedural, enforceable at law or inequity byany party against The United States.
Meaning that if you feel like somebody isn'tdoing what they're supposed to do, that a bank
is not reporting properly exactly what thingsthey did that were illegal to the executive
branch agencies that they are supposed to underthis executive order that you, as a person, a
(38:29):
citizen of The United States, do not have theright to sue over this.
This has not created some kind of contractualarrangement that can be breached by some party
to this not doing what they're supposed to do.
And then I highlighted at the end that as a bitof a slam or stray towards the small business
administration, the cost for publication ofthis order shall be borne by them, the SBA.
(38:53):
And so what we see here is an executive orderthat is written as executive orders really must
be, telling the agencies within the executivebranch how the executive, the president of The
United States, would like the laws to beenforced, but we don't actually see a lot of
specifics around that enforcement.
We see a lot of holes, a lot of loopholes bywhich a financial institution on the first part
(39:17):
and a regulator on the second part could avoiddoing much of anything under these particular
rules.
And so when people say that they're destroyed,when people say that they're screwed, I just
wanna caution folks from jumping in too heavilyon that particular side of the argument because
there are a whole lot of reasons why if I werethe lawyer for Mastercard, sitting in the
(39:38):
Mastercard boardroom, I would say, alright.
We have to see how this plays out.
There certainly isn't nothing that the federalgovernment is concerned about these things, but
I would not be quaking in my boots, and I wouldexplain all of this to them that, look.
Here is a point of weakness that the regulatorshave to actually abide by what the president
wants to do here.
Here's a point of weakness that the financialinstitutions actually have to believe that they
(39:59):
violated something that they report to theregulators.
Here's a point of weakness that any of thisrelates at all to what we're doing with respect
to steam and itch insofar as we're not makingpolitical statements.
We're not trying to isolate the people that arein favor of the right or MAGA or anything else.
We're really just aimed directly at the porngames that apparently offend us as an
institution or otherwise.
(40:19):
And so you're gonna have a hard case to make ifyou wanna tell us that we can't otherwise say
Steam, we don't wanna be in the business ofselling those games, and so we're not gonna
payment process for you.
So if you are concerned about this story, whatI would say is absolutely be concerned about
this story.
But remember that the executive orders are onlyfor the executive branch, that this order is
not aimed at the game situation, and that thevagueness and lack of laws on this make the
(40:45):
effort as it stands at this moment in time aweak one.
Now there might be laws passed in the future.
There might be something that makes this astronger effort by The US Federal Government.
But as it stands right now, if I'm Mastercard,if I'm Visa, I'm saying, alright.
I will take that situation under advisement,but I'm not super worried that my entire
business model has been destroyed by the pen ofthe executive order.
(41:05):
And that's been VirtualGalley for today.
If you enjoy this content, as I said, please doconsider supporting us on Patreon or through
memberships and super chats on the channel,telling your friends that we're having these
conversations, or just leaving comments,comments, and more comments to this type of
video because that seems to be what YouTubelikes the most right now.
And on that note, I will leave you on one lastcomment from me, which is to say, as we've
(41:27):
discussed earlier in this video series, one ofthe reasons I am so against what Steam has done
in this particular context is that they have infact negotiated with the terrorists, that
Mastercard threatened to remove their abilityto payment process or Visa did or PayPal or
whomever was actually behind the scenes onthis.
Steam capitulated.
And as I said in that very first video in thisseries, capitulating to those demands, those
(41:48):
terroristic demands, to prevent you fromselling what it is that you wanna sell to the
buyers that wanna buy it that are otherwiselegal in the jurisdiction in which you're
operating leads to more requests from moreterrorists.
And this brings up a story that I've seenrecently that's, that Valve, the operators of
Steam, says PayPal support is no longeravailable in some regions due to those those
(42:08):
content concerns that we have discussed.
So this is why I get so frustrated as acorporate lawyer with the Steams of the world
even more than Itch because I don't think Itchhad quite the leverage that Steam did because
this was always going to happen.
This was always the next step.
If you capitulate on these grounds, if you justsay, okay.
Yes.
This kind of broad based pressure is gonnaprevent us from selling what it is we would
(42:29):
otherwise want to sell in our own market, thenyou're gonna get more people asking more
things, and there is no reasonable way to limitwhat has happened in this story to only the
things that you find bad and to only the thingsthat you would otherwise not wanna buy for
yourself.
That's what I'll leave you with for thisepisode of virtual reality.
I wish it were a happier note.
(42:49):
I do think it's a good thing that thegovernment overall is looking at these issues
and saying that's something that maybe weshould address, but an executive order
basically never answers the question from alegal point of view.
And in this particular case, it even answersless than it might otherwise do in other
contexts.
Thank you so much for being here with me, and Iwill catch you on the next episode of virtual
legality or otherwise.
(43:11):
Virtual legality is a YouTube video series withaudio podcast versions presented as commentary
and for education and entertainment purposesonly.
It does not constitute legal advice and doesnot create an attorney client relationship.
If you have legal questions about the topicsdiscussed, please consult own legal counsel.
Hello, and welcome to another episode ofVirtual Legality.
I'm your host, Richard Hoag, managing member ofthe Hoag Law Business Law Firm of Northville,
Michigan.
And today, we're diving once again into thestory about payment processors, the financial
infrastructure systems, and video games insofaras they are preventing video game purveyors
like Steam and itch.i0 from selling adultfacing content that is otherwise legal in the
(00:36):
jurisdictions that we're talking about, inparticularity, The United States.
And in also particularity, we're gonna talkabout an executive order today that was signed
by president Trump that has been described, asyou can see on your screen right now, by some
as essentially destroying the paymentprocessors and what it is that they've tried to
do by encouraging steam and itch.i0 to get ridof these products and services.
(00:57):
Now as lawyers are won't to do, I'm here invirtual reality to pour a bit of cold water on
this particular notion that the paymentprocessors, the financial industry on the
whole, is somehow screwed, as this particularthumbnail puts it, or destroyed by the notion
of an executive order signed by presidentTrump, or at least this particular executive
(01:17):
order that we are about to read as part of thisvideo.
And I also wanted to bring up another tweetthat I saw from a commenter called Vera Dark.
And, again, if you're in Virtual Galley for thefirst time here, I don't endorse any particular
readings of anything that I'm looking at when Italk about them in this space, but there are
folks on Twitter, on social media that aremaking commentary like this one.
(01:37):
I found it particularly useful to dive intothat I think are a little bit wrongheaded.
Not that there's anything wrong with taking acrack at evaluating these things on your own.
I highly recommend it for anybody that'swatching or listening to this show.
But in this particular case, we can take whatVera says here, and we can analyze it as part
of this video and see how she misses the mark alittle bit.
(01:59):
As she puts it, this executive order came downtoday, and it clearly states banking services
can't be denied because of protections providedby the constitution of The United States.
That seems to be implying the first amendmentfreedom of expression issues that we've talked
about as part of this series.
It mentions companies have a hundred and eightydays to remove any provisions from their terms
of service that mention reputational damage tothemselves due to the fact that they must
(02:20):
provide all lawful citizens with bankingservices.
Now that's a misunderstanding of what thisexecutive order is going to do.
We're going to dive into that as part of thisvideo.
Companies like Visa, Mastercard can no longerdeny payment for something that, in their
opinion, lacks artistic value, but is legal inThe US.
And that goes too far with what this executiveorder says as well, which Valve had pointed to
their rule that outlines the sales of productsor services that are, quote, unquote, patently
(02:44):
offensive and lack serious artistic value orany other material that the corporation deems
unacceptable to sell in connection with theirmark, their trademark, as a violation of the
rule that they put forth.
That's a reference to the Mastercard rule wesaw cited by Steam and that we discussed in the
prior video in this series.
Ultimately, creators can't have funding sourcesripped away from them over political opinions
(03:04):
deemed damaging.
And so I wanted to highlight this commentarybecause this is the same kind of comments that
I saw online so often with respect to thisstory, and I think it goes too far.
It's incorrect in important ways that I thinklead people to believe that, one, this fight is
over when it very much isn't.
That if you care about these things, if youcare about Visa, Mastercard, PayPal, or
(03:25):
whomever forcing Steam and itch.i0 to not sellwhat those services want to sell to you and
which are legal in the jurisdictions we'retalking about, then you have a continuing fight
to engage in on this particular topic.
But, also, I just wanted to talk about what anexecutive order actually is, what it isn't, and
so we can better understand what it is thatpresident Trump or any other president in The
(03:46):
United States or any other jurisdiction isactually capable of doing on this score with a
method like an executive order.
So on that note, please hang in there.
We're gonna get into the weeds on this.
But before we do, I wanted to mention that thischannel is supported by viewers and listeners
like you through Patreon, through membershipsand super chats, and other things that you can
do to tell Google that you are enjoying thiskind of commentary.
(04:09):
Also, among those things are leaving comments.
This particular topic tends to rub thealgorithms of the world the wrong way because
we're gonna say words that the algorithms don'tlike when we talk about these things.
And as I said in my prior video, we're notgoing to restrict ourselves from saying those
words.
I find it anathema to talking about censorshipby only censoring myself to using words that
the algorithm approves of.
(04:30):
So please do leave comments, leave likes, leavedislikes, whatever it is that actually touches
Google and YouTube's buttons.
It really appreciates that.
It seems to let these videos be seen fartherand wider than they would be without that
process.
So if you're interested in these types ofconversations and you find them useful, please
do leave a comment.
I also try to read those as much as I can andget to answers of questions that people have in
(04:52):
those comments as well.
So please do consider that.
Now as I said, we're gonna get into the weedshere.
And as I promised, we're gonna get into theweeds on a legal basis as this is a legal
facing YouTube channel.
So the first thing we need to understand iswhat an executive order is.
So I've highlighted here the three branches ofthe US federal government.
I assume for most United States listeners andviewers that you got some version of this in
(05:17):
elementary school, but we have a lot ofinternational viewers and listeners on this
channel, and I wanna make sure that we're clearon what is and isn't happening here.
So I've put three boxes on your screen, onelabeled judicial, one labeled executive, and
one labeled legislative to show the threebranches of the US government.
Now we call these coequal insofar as they havechecks and balances and things that they can do
(05:37):
and can't do and fight against each other incertain ways.
They aren't necessarily equal in everyinstance, but it is a useful kind of rubric to
think about that the judicial executive andlegislative can't really do everything that the
US federal government wants to do on any givenissue.
And to underscore that a little bit more, I'vehighlighted what it is that we're talking about
here and what it is that they do and don't do.
(05:58):
So on your board right now, you see executivebranch in blue.
That's the branch that is going to be issuingan executive order.
That's the president of The United States.
And I've highlighted here that his job isenforcer.
He enforces the laws, and he sets enforcementpriorities through things like executive
orders.
He tells the executive branch what he wants tohave happen in the enforcement of laws, but he
(06:20):
doesn't write those laws.
Who writes the laws?
The legislative branch writes those laws.
They are the rules maker.
They are the ones putting forth what the publicpolicy of The United States actually is.
You'll hear newsmakers talk about the fact thatthe president sets public policy.
That's true insofar as he asks the legislatureto do things for him.
It isn't true when we're talking aboutexecutive orders like the one we're about to
(06:42):
talk about today.
The legislative are the ones that evaluate whatthe problems of the country are, determine what
the public policy of the country should be, andrights laws around that public policy.
The executive then goes to enforce those lawsas written by the legislative, but they are not
the final arbiter of whether a law has beenbroken.
They go to enforce them by maybe bringing anaction in court, and then the judicial branch
(07:04):
actually interprets what the law says anddecides the cases and controversies before it.
So, yes, coequal branches doing differentthings, but what's important about this story
is that an executive order is not a law.
It is a set of enforcement priorities that onlygovern the executive branch itself.
So your first takeaway when you're talkingabout this issue with others, online or
(07:28):
otherwise, is that executive orders govern theexecutive branch.
The executive branch is huge.
It's multi thousands of people, agencies allover the place.
We've talked about a lot of them here invirtual legality.
An executive order says, alright, agency.
I want you to think about this issue this way.
I want you to enforce it in this manner, but anexecutive order does not control the citizenry.
(07:48):
It does not control the judiciary.
The executive branch can say, this is what Ithink this law says, and this is how I want you
to enforce it.
The agencies can take that under advisement anddo what the president asks.
That's what they're supposed to do in theexecutive branch, but that doesn't control what
the court might say the law actually says.
It's just one person's evaluation of what itsays, and they don't have the power.
They don't have the authority to evaluate thatfor all the citizens of the country.
(08:11):
So we'll talk about that as we go on in thisvideo, but the judiciary is going to have an
important role to play in whether or not theexecutive order we're about to read can even
take effect to the extent that the presidentseems to be advocating it too.
So as we dive in here, in the guaranteeing fairbanking for all Americans executive order
issued on 08/07/2025, we'll see certain areasin which the presidency and the executive
(08:36):
branch on the whole maybe try to steal a base,maybe go a step further than an executive order
really allows them to do, and the courts arenot always gonna look to so kindly upon that.
That's our first kind of commentary.
Executive orders cannot control the citizenry.
They cannot actually order Mastercard or Visaor PayPal or anyone else to do anything.
(08:57):
What they can do is tell the people thatalready work in the executive branch, the
agencies and whatnot, what it is that thepresident wants to see them do.
So first, we start out with what we might callrecitals in a legal document here where we
establish what the problem is.
We talk about what issue we're trying toaddress with this executive order.
Section one, purpose.
Financial institutions have engaged inunacceptable practices to restrict law abiding
(09:21):
individuals and businesses access to financialservices on the basis of political or religious
beliefs or lawful business activities.
So first and foremost, we see here that thepurpose is to address financial institutions
engaging in what the president deems to beunacceptable practices.
Financial institutions are not what we'retalking about necessarily with respect to the
video game situation.
(09:42):
We're talking more about the processors, thepeople that allow the money to move between
banks rather than the banks themselves, thefinancial institutions on the whole.
We also note in this first sentence that thefocus appears to be on political or religious
beliefs even though lawful business activitiesare also included in the second category.
So we already have a concern that this isn'taimed directly at what we'd want it to be aimed
(10:04):
at, which I will spoiler spoiler alert for youhere, it is not.
Some financial institutions participated ingovernment directed surveillance programs
targeting persons participating in activitiesand causes commonly associated with
conservatism and the political right followingthe events that occurred at or near The United
States Capitol on 01/06/2021.
Here again, we say, uh-oh.
(10:25):
Alright.
So this executive order is really concernedabout debanking.
Right?
It's really concerned, as the headline says,making banking fair for all Americans, but it's
really concerned about that from the conceptthat the banks, the financial institutions of
the country were erroneously surveilling andotherwise harming people that were associated
with conservatism and the political right.
(10:46):
Now I don't know how you choose to characterizeSteam and itch.io getting rid of adult games on
their services, but I don't think that that isa step taken by Steam or Itch to specifically
advocate for conservatism or the politicalright.
In fact, the most common refrain in terms ofarguing against these particular censoring
activities is that conservatives in thepolitical right are the ones at Collective
(11:10):
Shout, the advocacy group that has moved forsome of these actions to take place.
And so if anything, steam and itch trying tofight the payment processors on this are
advocating for a more liberal kind of conceptin terms of what they should be allowed to
sell.
So if this executive order were limited only totelling banks that they can't harm
(11:31):
conservatives and the political right, we wouldlook at this and say that's a really difficult
case to make for Steam and Itch against Visa,Mastercard, PayPal, or whomever.
But that's not all this says, so we cancontinue to read on.
The federal government suggested that suchinstitutions flag individuals who made
transactions related to companies like Cabela'sand Bass Pro Shop or who made peer to peer
(11:52):
payments that involved terms like Trump orMAGA, even though there was no specific
evidence tying those individuals to criminalconduct.
So here, we see that the issue that thepresident poses in this purpose section is that
banks were debanking people for saying nicethings about, right leaning politicians or
politics, and also that the federal governmentwas taking an extra step in suggesting to banks
(12:16):
that they debank folks that shopped at placesthat might otherwise reflect conservative or
right leaning political views.
And I think it's easy enough to look at thissituation and say, alright.
If that is in fact the case, if that is in factwhat happened, then this seems appropriate to
say, banks, you shouldn't be doing that.
We already talked about payment processorsbeing essentially infrastructural common
(12:37):
carrier type entities.
Banks, certainly in 2025 and the twenty firstcentury on the whole, digital banking and the
economy on a global basis are that same kind ofinfrastructure piece of the economy.
And so this all makes sense.
And so far as it is written here, we don't havethe kind of evidence to suggest this actually
happened in the way it is stated here in thepurpose section, but that's not what an
(12:59):
executive order does.
So we press on.
Bank regulators have used supervisory scrutinyand other influence over regulated banks to
direct or otherwise encourage politicized orunlawful debanking activities.
Quote, unquote, operation chokepoint, forexample, was a well documented and systemic
means by which federal regulators put pushedbanks to minimize their involvement with
(13:21):
individuals and companies engaged in lawfulactivities and industries disfavored by
regulators based on factors other thanindividualized objective risk based standards.
So here, they're saying, okay.
The federal government in the past had anoperation, quote, unquote, operation choke
point that said, we're gonna push you to debankfolks that we don't find terribly helpful to
(13:46):
our political cause, and that the banks didthat, other than for reasons based on risk.
Now I highlighted in this discussion other thanindividualized objective risk based standards
because this is the kind of concept thatprobably needs a defined term, probably would
need in a law a specific section talking aboutwhat we mean by this term.
We can understand it intuitively as somethinglike, alright, bank.
(14:09):
You can look at somebody's income level.
You can look at what they they do with theirmoney, and you can say, I don't wanna make this
loan.
I don't wanna allow this banking servicebecause I feel like you are more likely to
default on your loan or your checking accountor what have you.
And if we can make that kind of actuarialargument, then we can otherwise not work with
you, and we have to be able to do that becauseotherwise we can't stay in business.
(14:33):
But just saying you shop at Cabela's is notsomething that we think would otherwise
indicate a higher level of risk for loans orchecking accounts or otherwise.
And so if you were doing this on some otherbasis, then we've got a problem.
The issue with this from the perspective of thestory we're talking about is that the
Mastercard rule we mentioned in the prior videoessentially says Mastercard can look at a
(14:54):
situation and say, this increases our corporaterisk.
It can be economic.
It can be reputational.
It can be any of these things.
And if it so increases that risk, we can tellyou we might be concerned about this.
And as we also talked about in that priorvideo, Mastercard itself doesn't necessarily
have to say anything when its financialpartners can be told that this rule exists, and
they can put the the push down on Steam or Itchor anyone else that says Mastercard might have
(15:19):
an issue with this.
And then Steam adds a rule that says, okay,developers.
Don't add anything to our service that's thatMastercard might have an issue with, which is
obviously an impossible situation forMastercard.
It's an impossible situation for the devs.
It's an impossible situation for Steam.
But that's where we exist right now, none ofwhich necessarily speaks to anything that isn't
an individualized objective risk basedstandard.
(15:41):
So we already have our first issue with kind ofvagueness here, which is to say, alright.
If that's the basis you're going to use foryour rule, and spoiler again, it is, then we've
got an issue with these payment processors oreven these banks being able to say, well, look.
That is an individualized objective risk basedstandard.
We don't wanna work with incest porn videogames.
We think that increases the likelihood thatSteam or its users are gonna cause a problem
(16:04):
for us either reputationally or economically.
And so that's a legitimate business interestthat we have.
And so go away executive order.
We're not really concerned about any of this.
Continuing, as a result, individuals, theirbusinesses, and their families have been
subjected to debanking on the basis of theirpolitical affiliations, religious beliefs, or
lawful business activities.
And you see that last category is what we'retalking about because I don't really believe
(16:27):
that the sales of video games on Steam or Itchare politically affiliated or religious beliefs
and have suffered frozen payrolls, debt, andcrushing interest, and other significant harms
to their livelihoods, reputations, andfinancial well-being.
Such practices are incompatible with a freesociety and the principle that the provision of
banking services should be based on material,measurable, and justifiable risks.
(16:49):
I e, again, we don't have a problem with youcoming to the conclusion that somebody is a
risk to your loan portfolio.
You don't wanna issue them money.
We're not going to mandate that you otherwiseloan things to people or otherwise open
checking accounts for everybody that walks inyour door, even though the federal government
does that in certain important respects.
They further undermine public trust in bankinginstitutions and their regulators, discriminate
(17:11):
against political beliefs and free expressionof those beliefs, and weaponize a politicized
regulatory state.
Policy.
It is the policy of The United States that noAmerican should be denied access to financial
services because of their constitutionally orstatutorily protected beliefs, affiliations, or
political views.
Now the first part of that sentence sounds likewe're aimed directly at what we're talking
(17:31):
about.
Right?
Mastercard, Visa, PayPal, whomever, arguingagainst Steam and Itch being allowed to sell
what they are otherwise legally allowed tosell, and that might be its own issue.
But, again, comes the concept that wehighlighted at the top of this, that what we're
really concerned about if we are the executivebranch of the United States are actions that go
against beliefs, affiliations, or politicalviews.
(17:51):
It's very difficult for me to imagine Steam orItch arguing that their sales of these games
qualify for that, except on the broadest basisof we should have the freedom to sell whatever
we want.
Banking decisions must instead be made on thebasis of individualized objective and risk
based analyses.
Definitions.
The term politicized or unlawful debankingrefers to an act by a bank, savings
(18:14):
association, credit union, or other financialservices provider to directly or indirectly
adversely restrict access to or adverselymodify the conditions of accounts, loans, or
other banking products or financial services ofany customer or potential customer on the basis
of the customer or potential customer'spolitical or religious beliefs or on the basis
of the customer's or potential customer'slawful business activities that the financial
(18:37):
service provider disagrees with or disfavorsfor political reasons.
So a lot to unpack there.
Obviously, that's full legalese.
We're getting into the law part of this entireconversation, but let's start unpacking.
First, we note that what we're really talkingabout here at the top of this definition are
banks.
Right?
This is the debanking executive order.
This isn't really about payment processing atall.
(18:59):
Although, the definition is written broadlyenough to grab what we're talking about with
respect to processing credit card payments intoSteam or Itch or anyone else.
Right?
We can read this to just point directly atother financial service providers, restricting
access to financial services, and say, yep.
That hits what we needed to hit from what we'retalking about as part of this conversation.
(19:19):
But we have to note, as certainly Mastercardand Visa and anybody else would note in reading
this, that this is not aimed at us.
This is aimed at banks.
This is aimed at debanking.
Furthermore, it's aimed specifically atdebanking for political or religious beliefs
and only really restricts us from doing thingsthat harm people's lawful business activities
if we did it because we disfavor thoseactivities for political reasons.
(19:43):
Now it's easy enough to get out there on thestreets and argue that what Visa and Mastercard
are against here are things that are lewd orthings that are something that don't agree with
their political affiliations as companies.
But it's more difficult to see them disfavoringthese things as political reasons from a
(20:06):
conservative versus liberal perspective oranything that we might consider politics
outside of the overall everything personal ispolitical kind of concepts, which is not what
the law aims at.
It's not what this language aims at.
So are Visa and Mastercard doing this to steaman itch for political reasons?
You'd have to make a pretty narrow argument,and certainly Visa and Mastercard would make
(20:28):
the opposite argument.
They're doing this because of the brand damagethey think would happen with respect to their
brands if they allowed these things.
And if it came down to it, they're doing itbecause we think that services that provide
these types of products to their customers aremore likely to default for some reason that we
could probably make with the copious amounts ofdata at our fingertips if we're Visa,
(20:50):
Mastercard, PayPal, or anyone else in thefinancial processing arena.
So we've got issues with the definitions there.
We do note again that it's just not aimed atwhat we want it to be aimed at.
So when we talk about the commentary that wementioned at the top of this video, it has to
be part of the conversation that this executiveorder not only just controls the executive
branch and not the Visa and Mastercards of theworld, but also isn't really aimed at this
(21:15):
particular issue.
It's aimed at an adjacent issue, which mightwell be applicable to the issue that we're
concerned about when we talk about it invirtual legality.
But as it not being aimed directly at it, wouldbe fairly easy for the payment processors in
this particular story to skate around.
Now the term federal banking regulators, asstated in this executive order, refers to the
Small Business Administration, SBA, and thefederal member agencies of the Financial
(21:39):
Stability Oversight Council with supervisoryand regulatory authority over banks, saving
associations, or credit unions.
So looking at this, like we mentioned at thetop, executive orders can only control the
executive branch.
This executive order is aimed at federalbanking regulators.
It is aimed at telling the SBA and the otherfederal member agencies that otherwise license
(22:00):
the banks in The United States, and I'm gonnashorthand this considerably.
So if you're a lawyer in the credit industryand you're in the comments, you can let the
folks know exactly how much my shortening hasmissed the message of what it is that federal
regulators regulators do in the bankingindustry.
But these are the folks that license banks, ifyou don't do what they say, if you don't
(22:21):
operate in the way that they tell you, then youcan lose your ability to perform banking
services in The United States.
And so they're very important regulators, inthe country, but they are the only bodies that
president Trump has the authority to kind oforder around in a manner like this one.
Sec section four, removing reputation risk andpoliticized or unlawful debanking.
Now this is the section that we saw thecommentator Vera talking about earlier,
(22:46):
suggesting, as she did, that it mentions thatcompanies have a hundred and eighty days to
remove any provisions from their terms ofservice that mention reputational damage to
themselves.
That's not what's happening in this section, solet's see what is happening.
Within a hundred and eighty days of the date ofthis order, each appropriate federal banking
regulator shall, to the greatest extentpermitted by law, remove the use of reputation
(23:06):
risk or equivalent concepts that could resultin politicized or unlawful debanking, as well
as any other considerations that could be usedto engage in such debanking from their guidance
documents, manuals, and other materials.
So what that says is that the people under mypurview, if I'm president Trump, will take out
of their recommendations for how to comply withour rules and regulations that you can use
(23:28):
reputation risk or equivalent concepts in yourmaterials because, according to president Trump
and his executive branch here, that allows fortoo much leeway for you to start debanking
people on political grounds.
But what he doesn't do, what he can't do, whathe doesn't have the authority to do is tell
Visa and Mastercard that they can't have thatrule in place.
(23:48):
He can tell his regulators to say that's not arecommendation, and maybe we'll penalize you.
We'll see that a little bit further on in theexecutive order, but he can't tell them what to
do.
They are the citizenry.
They are outside his purview in this context.
That's why when we have major issues in TheUnited States, when other folks have major
issues in their jurisdictions, I always tellyou, you can't depend on the executive order
(24:11):
process.
You have to actually pass laws.
This was not that controversial not so longago.
But if you wanna fix things on a policy basisin the country of your choice, you actually
have to go and get whatever version of therules that are passed by your representatives
in the books more than you have to getexecutive orders and kind of policy
preferences, established by the executive herein The United States.
(24:35):
So that's what this actually says.
Then we note the parenthetical, which is superimportant here.
We just told you that you should remove allreferences, reputation risk, other than exec
existing regulations or other materialsrequiring notice and comment rulemaking.
Now notice and comment rulemaking is how rulesare made by regulators in The United States to
comply with the Administrative Procedures Actthat we actually have to post when we're gonna
(24:57):
do something serious, and we have to takecomments from the public.
And then only after certain time frames havebeen passed can those rules go into effect.
So those are the important rules.
Everything else is just guidance documents,manuals, other materials in this particular
rule.
Those aren't that important to how a bank isactually licensed.
They aren't important to how the countryactually operates.
They are important insofar as if you're runninga bank, you wanna comply with the regulator
(25:21):
that's breathing down your neck to do variousthings.
But the things that aren't going to change as apart of this executive order are the things
that have actually gone through the formalprocess of notice and comment rulemaking.
So we're already talking about a thinner sliceof everything than what we would have been
talking about without this context, but this isthe executive or his lawyers essentially saying
(25:41):
you can't actually ask for anything that goesbeyond these kinds of opaque, somewhat middle
of the road documents described here asguidance manuals and other materials.
And so you can't take out the real rules.
You can only take out the kind of slightunwritten type rules that these regulators are
otherwise using.
The federal banking regulators shall alsoconsider rescinding or amending existing
(26:03):
regulations consistent with applicable law toeliminate or amend any regulations that could
result in politicized or unlawful debanking andto ensure that any regulated firms or
individuals' reputation is considered forregulatory supervisory banking or enforcement
purposes solely to the extent necessary toreach a reasonable and apolitical risk based
assessment.
So this is the kind of umbrella concept.
(26:24):
Look, regulators, you'll also considerrescinding.
I'm not actually going to order you to rescind,but you'll consider rescinding anything that
you find that might otherwise create this grayarea that would allow you to debank on a
political basis.
Now that's obviously very broad, but just likeevery other aspect of this story, the agencies
themselves, the federal regulators themselves,are going to have a certain amount of leeway
(26:47):
themselves to determine what it is to complywith an order like this one.
And, certainly, this is weak language on itsface.
The SBA, the Small Business Administration,shall within sixty days of the date of this
order give notice to all financial institutionswith which it guarantees loans under its
lending programs, requiring that each financialinstitution that is subject to the SBA's
jurisdiction and supervision within a hundredand twenty days of this order make reasonable
(27:11):
efforts to identify and reinstate any previousclients of the institution or any subsidiaries
denied service through politicized or unlawfuldebanking action in violation of a statutory or
regulatory requirement under section seven a ofthe Small Business Act or any requirement in a
standard operating procedures manual or policynotice related to a program or function of the
Office of Capital Access with notice of thereinstatement sent to the victim.
(27:34):
So a lot of legalese again.
But what this says is that the SBA and all thebanks that operate with SBA loans that are
guaranteed by the SBA will tell the banks thatit's affiliated with that they will make
efforts to go and figure out whether they'vedone any debanking that would violate the
concepts here in this executive order.
(27:56):
But because the executive order can't set laws,they actually have to point to rules that might
have been violated by this debanking.
And so they point to section seven a of theSmall Business Act, and they point to operating
procedures, manuals, and policy notices thatare, again, in that kind of unwritten rules,
not quite rule and comment rulemaking typedocumentation, and say those are violations.
(28:17):
And so you will go and you will fix thesethings, institutions which we are affiliated
with at the SBA.
Now the biggest issue here is as we've alreadytalked about, the executive branch is not the
judiciary.
So you can make an executive order and say,alright.
We think this is a problem, and we think thatdebanking in this fashion is illegal in some
(28:37):
important way.
But you, people that are operating the bank,people that are operating the payment
processor, the other financial servicescompanies might disagree.
Right?
This is actually saying you will go and youwill identify anybody that you debanked in
violation of these rules.
Surely, you didn't think that you were doing itin violation of the rules when you did it only
a few years ago.
And part of the overall recitals portion ofthis document suggested that the government
(29:02):
itself was encouraging banks to do this thing.
So you didn't feel it then.
You probably don't feel it now.
If you don't feel like you're in violation forwhatever it is that you did in the past, then
this doesn't do anything at all.
Right?
The SBA says, alright.
Go flag for your us the people that you didthis to, and you say, well, we're not we're not
bad people here at Bank x.
We didn't do this at all.
There was no violations of section seven a ofthe small business act.
(29:25):
That's the loan guarantee program.
We don't know exactly what's in the rest of theoperating procedures manual or policy notice,
but probably very similar.
And so we don't think we violated any rules.
So thank you, SBA, for contacting us with this,but we don't think we have to tell you about
any victims as you so nicely frame it in thisdocument.
In addition, the SBA will say within onehundred and twenty days of the date of this
(29:47):
order, you have to identify all potentialclients denied access to financial services,
through a politicized or unlawful debankingaction in violation of the things we just
talked about.
And within a hundred and twenty days of thedate of this order, you identify all potential
clients denied access to payment processingservices provided by the financial institution
or any subsidiaries through a politicized orunlawful debanking action with the same
(30:07):
violations.
Right?
So you will go and you will make lists for usof all the people you screwed over on this
basis, and then we will do something about itafter the fact.
But, again, these banks aren't otherwise gonnabe bound to find that there was a violation of
this type.
The president can't order them to find aviolation.
He can only kinda tell his regulators what he'slooking for, and the regulators can go and
(30:29):
communicate that, and they can certainly presson some of these banks if they feel they're
being untruthful on these questions.
But it is an attenuated process that doesn'tnecessarily lead to anything at this point in
time.
Section five, scrutinizing, politicized, orunlawful debanking.
Within a hundred and eighty days of the date ofthis order, the secretary of the treasury, in
consultation with the assistant of thepresident for economic policy, shall develop a
(30:51):
comprehensive strategy for further measures tocombat politicized or unlawful debanking
activities of financial regulators andfinancial institutions across the federal
government, including consideration oflegislative or regulatory options to eliminate
such debanking.
Legislative options there being, includingseeing if congress is willing to pass a law on
this.
Regulatory options would be changing ruleswithin our in house executive branch offices,
(31:13):
which can, of course, play a major factor inhow banks actually operate because they are
fully regulated institutions in The UnitedStates.
But this is where the actual rubber hits theroad.
We're gonna see if we need to do something moresignificant than this.
This is the first step of potentially many orpotentially the last step of no further steps
on this particular topic.
(31:35):
And so the executive order should not be seenas screwing or destroying anyone.
And I know YouTubers and influencers andcommenters are are used to kind of making
headlines like that.
But my job here, as I see it, is to tell youwhat the truth of the matter that I can see in
these stories actually is.
And in this particular story, this executiveorder is perhaps the weakest starting point
(31:58):
that you can have for this, but you can stillcelebrate the win if you're so inclined as the
federal government in The United Statesactually being concerned about these kinds of
things.
But we have no indication that they areconcerned about the things that we are
concerned about with respect to video games andmedia and the payment processors throwing their
weight around on that score as it stands thisminute.
(32:19):
Within a hundred and twenty days of the date ofthis order, each federal banking regulator
shall conduct a review to identify financialinstitutions subject to its jurisdiction that
have had any past or current, formal orinformal, policies or practices that require,
encourage, or otherwise influence suchfinancial institution to engage in politicized
or unlawful debanking and to take appropriateremedial action to the extent authorized and
(32:41):
consistent with applicable law, includinglevying fines, issuing consent decrees,
imposing other disciplinary measures againstany financial institution subject to the
jurisdiction of such banking regulator, thatthey were engaged in this unlawful activity,
including reference to section five of theFederal Trade Commission Act, section ten
thirty one of the Consumer Financial ProtectionAct, and the Equal Credit Opportunity Act.
(33:03):
So here he points to laws.
Right?
And this is important because as I saidearlier, they are not the final arbiter of when
a law has been violated.
So we have to look at a few things.
First, we'll look at section seven a of the SBAor more particularly how the SBA describes its
seven a obligations so that we just understandwhat we're talking about with respect to those
SBA obligations.
(33:23):
The seven a loan program is the Small BusinessAdministration's primary business loan program
for providing financial assistance to smallbusinesses, but the SBA doesn't loan out the
money directly.
Instead, what the seven a loan program is isthe federal government guaranteeing repayment
of loans to lenders.
So you go to your bank.
You're a small business.
You say, need $5,000,000, and the bank says,well, based on what you've got in place, that
(33:48):
doesn't make any sense to us.
You're too high of a risk, and the federalgovernment goes and subsidizes these lenders.
They guarantee the repayment of these loans tothose lenders if they qualify under certain
application type documents for purposes of anSBA guarantee.
And this is one of those things that I do alot, in my line of work.
I have a lot of small businesses.
I have a lot of founders that are looking forcapital.
(34:09):
And the SBA loan program determines exactly howyou are going to go and file for a loan with
your local bank.
And this is one of those things where the SBAhas a major part to play in the economy of
small business in The United States, but theydon't actually give out the money themselves.
They simply guarantee the repayments, to thefinancial institutions.
(34:31):
The maximum loan amount for a seven a loan is$5,000,000.
Key eligibility factors are based on what thebusiness does to receive its income, its credit
history, and where the business operates.
But importantly, as I just mentioned, theydon't provide the loans directly, although they
can help with the process because they're theones that put the rules in place.
So that's a seven a loan.
You could see how the executive branch says,alright, SBA.
(34:52):
Go tell the banks that you've otherwiseguaranteed that they have to be in compliance
with this executive order if they wannacontinue to work with the SBA.
That's how an executive order works.
Going a little bit further, let's talk aboutthe FTC because one of the things that was just
called out was section five of the FederalTrade Commission Act.
This document here is a congressional researchservice document that is designed to be given
to congresspeople to inform them of what'shappening in various aspects of the law.
(35:17):
This was done about the FTC in section five.
It says in addition to enforcing severalspecific laws, the agency enforces section five
of the Federal Trade Commission Act against allUS persons, partnerships, and corporations
subject to a few exceptions.
Section five identifies two categories of actsunder FTC's enforcement authority, unfair or
deceptive acts or practices in or affectingcommerce, and unfair methods of competition.
(35:39):
The first of these provisions, frequentlyreferred to as the UDAP provision, provides the
basis for many of the FTC's consumer protectionactions when the agency lacks more specific
statutory authority.
Section five does not, and this is important,define unfair or deceptive acts or practices.
So the Federal Trade Commission, recently, inrespect of non competition agreements in The
(36:00):
United States, can go and say, we think thatthis particular behavior of business in the
country is unfair or deceptive.
And then they can go and issue guidance onthat.
They can even bring enforcement actions,lawsuits against people they think violate
their rules.
The agency, as described here in thiscongressional research service document, said
they may issue policy statements or guidance.
(36:21):
They may issue rules defining practices asUDAPs.
The agency may pursue enforcement actions, as Ijust mentioned.
But, again, importantly, when we're talkingabout section five, although they will assert,
as they did in November 2022, that they havebroad authority to name anything like
noncompetition agreements as unfair ordeceptive, we will find as we look further in
(36:42):
these stories that they run into trouble whenthey do so.
Federal court issues nationwide injunctionblocking FTC noncompete ban.
And this is as of August 2024.
This whole concept is still proceeding throughthe courts.
But as we saw earlier in virtual reality withrespect to Microsoft and Activision, the FTC or
any other agency of The United States can sayyou're in violation of the law, but they aren't
(37:04):
the ones that finally get to decide that.
That is the court system.
And so when the executive goes and tells hisagencies, that they should consider whether or
not a debanking action would violate sectionfive of the Federal Trade Commission Act, then
they can make that determination, but they'restill not over the over the hump, out of the
(37:25):
woods in terms of actually winning that case ina court of law in The United States.
So we're still many steps removed, many stepsattenuated from actually saying Visa and
Mastercard, it's time to shake in your boots onany of this.
Within a hundred and eighty days of the date ofthis order, the federal banking regulators
shall review their current supervisory andcomplaint data to identify any financial
(37:45):
institution that is engaged in unlawfuldebanking on the basis of religion.
And then they'll find that if they are unableto obtain compliance within the meaning of this
specific act under The United States code, adifferent law, they will refer the matter to
the attorney general for appropriate civilaction.
General provisions.
The authority granted by law to an executivedepartment or agency has not otherwise been
(38:06):
impaired.
This order is not intended to and does notcreate any right or benefit, substantive or
procedural, enforceable at law or inequity byany party against The United States.
Meaning that if you feel like somebody isn'tdoing what they're supposed to do, that a bank
is not reporting properly exactly what thingsthey did that were illegal to the executive
branch agencies that they are supposed to underthis executive order that you, as a person, a
(38:29):
citizen of The United States, do not have theright to sue over this.
This has not created some kind of contractualarrangement that can be breached by some party
to this not doing what they're supposed to do.
And then I highlighted at the end that as a bitof a slam or stray towards the small business
administration, the cost for publication ofthis order shall be borne by them, the SBA.
(38:53):
And so what we see here is an executive orderthat is written as executive orders really must
be, telling the agencies within the executivebranch how the executive, the president of The
United States, would like the laws to beenforced, but we don't actually see a lot of
specifics around that enforcement.
We see a lot of holes, a lot of loopholes bywhich a financial institution on the first part
(39:17):
and a regulator on the second part could avoiddoing much of anything under these particular
rules.
And so when people say that they're destroyed,when people say that they're screwed, I just
wanna caution folks from jumping in too heavilyon that particular side of the argument because
there are a whole lot of reasons why if I werethe lawyer for Mastercard, sitting in the
(39:38):
Mastercard boardroom, I would say, alright.
We have to see how this plays out.
There certainly isn't nothing that the federalgovernment is concerned about these things, but
I would not be quaking in my boots, and I wouldexplain all of this to them that, look.
Here is a point of weakness that the regulatorshave to actually abide by what the president
wants to do here.
Here's a point of weakness that the financialinstitutions actually have to believe that they
(39:59):
violated something that they report to theregulators.
Here's a point of weakness that any of thisrelates at all to what we're doing with respect
to steam and itch insofar as we're not makingpolitical statements.
We're not trying to isolate the people that arein favor of the right or MAGA or anything else.
We're really just aimed directly at the porngames that apparently offend us as an
institution or otherwise.
(40:19):
And so you're gonna have a hard case to make ifyou wanna tell us that we can't otherwise say
Steam, we don't wanna be in the business ofselling those games, and so we're not gonna
payment process for you.
So if you are concerned about this story, whatI would say is absolutely be concerned about
this story.
But remember that the executive orders are onlyfor the executive branch, that this order is
not aimed at the game situation, and that thevagueness and lack of laws on this make the
(40:45):
effort as it stands at this moment in time aweak one.
Now there might be laws passed in the future.
There might be something that makes this astronger effort by The US Federal Government.
But as it stands right now, if I'm Mastercard,if I'm Visa, I'm saying, alright.
I will take that situation under advisement,but I'm not super worried that my entire
business model has been destroyed by the pen ofthe executive order.
(41:05):
And that's been VirtualGalley for today.
If you enjoy this content, as I said, please doconsider supporting us on Patreon or through
memberships and super chats on the channel,telling your friends that we're having these
conversations, or just leaving comments,comments, and more comments to this type of
video because that seems to be what YouTubelikes the most right now.
And on that note, I will leave you on one lastcomment from me, which is to say, as we've
(41:27):
discussed earlier in this video series, one ofthe reasons I am so against what Steam has done
in this particular context is that they have infact negotiated with the terrorists, that
Mastercard threatened to remove their abilityto payment process or Visa did or PayPal or
whomever was actually behind the scenes onthis.
Steam capitulated.
And as I said in that very first video in thisseries, capitulating to those demands, those
(41:48):
terroristic demands, to prevent you fromselling what it is that you wanna sell to the
buyers that wanna buy it that are otherwiselegal in the jurisdiction in which you're
operating leads to more requests from moreterrorists.
And this brings up a story that I've seenrecently that's, that Valve, the operators of
Steam, says PayPal support is no longeravailable in some regions due to those those
(42:08):
content concerns that we have discussed.
So this is why I get so frustrated as acorporate lawyer with the Steams of the world
even more than Itch because I don't think Itchhad quite the leverage that Steam did because
this was always going to happen.
This was always the next step.
If you capitulate on these grounds, if you justsay, okay.
Yes.
This kind of broad based pressure is gonnaprevent us from selling what it is we would
(42:29):
otherwise want to sell in our own market, thenyou're gonna get more people asking more
things, and there is no reasonable way to limitwhat has happened in this story to only the
things that you find bad and to only the thingsthat you would otherwise not wanna buy for
yourself.
That's what I'll leave you with for thisepisode of virtual reality.
I wish it were a happier note.
(42:49):
I do think it's a good thing that thegovernment overall is looking at these issues
and saying that's something that maybe weshould address, but an executive order
basically never answers the question from alegal point of view.
And in this particular case, it even answersless than it might otherwise do in other
contexts.
Thank you so much for being here with me, and Iwill catch you on the next episode of virtual
legality or otherwise.
(43:11):
Virtual legality is a YouTube video series withaudio podcast versions presented as commentary
and for education and entertainment purposesonly.
It does not constitute legal advice and doesnot create an attorney client relationship.
If you have legal questions about the topicsdiscussed, please consult own legal counsel.
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