Nathan Schneider about the co-op economy

Janine Jackson interviewed Nathan Schneider about the co-op economy for the September 21, 2018, episode of CounterSpin. This is a lightly edited transcript. MP3 Link

Janine Jackson: September 15 marked ten years since the largest bankruptcy in US history, that of Lehman Brothers, triggering—or exposing—a crisis that cost millions of people their homes, their jobs and their financial futures, followed by a government bailout of the banks behind the damage. The admission in a New York Times op-ed by former Treasury secretaries Henry Paulson and Timothy Geithner and former Federal Reserve chair Ben Bernanke that they “certainly didn’t get everything right” seemed to pass for reflection in corporate media.

But more substantive conversations are happening, have been happening, elsewhere, among those for whom the 2008 crisis and the response to it highlighted not only the flaws in the current system, but alternative visions.

We’re joined now by Nathan Schneider. He’s a journalist and assistant professor of media studies at the University of Colorado, Boulder, and author of—among other titles—the new book Everything for Everyone: The Radical Tradition That Is Shaping the Next Economy, out now from Nation Books. He joins us by phone from Boulder. Welcome to CounterSpin, Nathan Schneider.

Nathan Schneider: Thank you. I’m glad to be on the show.

JJ: Timothy Geithner was asked at a recent press event about the hardest moment for him, personally, of the 2008 crisis, and he said it was, as reflected in his wife’s face across the breakfast table, dealing with “the gap between what we thought would provide the broadest benefit…and what people thought was fair and just.” For him, it seems that that gap was kind of a perception problem, and overcoming it was a PR effort that he and others, alas, failed at. In a recent piece for Vice, you think about what it might have looked like to acknowledge that gap as real, and respond to it. I wonder if you’d share a little bit of what you were getting at there.

Nathan Schneider: “There’s a long tradition in American economic history, and the economic history of the world, of cooperative enterprise, businesses owned and operated by the people they serve.” (photo: Emily Hansen)

NS: I think it was really, more than anything else, an accountability gap. It’s internalized accountability, but it’s really stemmed from the ownership structures, and the design of some of the largest companies in our economy, the companies that were bailed out after the crash that they helped create. What that accountability means is these are companies, these large banks, that are owned and governed for the purpose of protecting the profits, especially, of large shareholders. So when hard decisions are being made at the companies about what to do—and then they decide how they’re going to lobby Washington, and people who have been trained and schooled in those companies, who hold posts in Washington, have to make decisions about what to do in a crisis like this—that accountability, consciously or unconsciously, is at the forefront, that they have to protect those investors above all, rather than, for instance, protecting the millions of people who lost their homes and their jobs as a result of that disaster.

And what’s exciting about this moment, and what I hope we can turn to as we veer into possibly another such crisis, is to recognize that we can actually shift that accountability.

There’s a long tradition in American economic history, and the economic history of the world, of cooperative enterprise, businesses owned and governed by the people they serve, exemplified by, for example, in the financial industry, credit unions, which are banks that are owned by the people whose money they hold and whose loans they carry. And these kinds of businesses behaved very differently in 2007 and 2008, and those should be the model of how we move forward, rather than simply doubling down on this backwards and very dangerous accountability problem.

JJ: It seems important to underscore that you’re not necessarily always talking about—or we’re not necessarily talking about—smoke-filled rooms and conspiracies and evil people. It really is about structures of accountability, and the way systems are set up.

Well, the values of cooperative work, of cooperative ownership, they aren’t new, even though we don’t hear about them every day. It’s almost like a hidden history.

NS: That’s right. And sometimes there are smoke-filled rooms involved, you know. For instance, a picture that came into my mind as you were saying that, an old picture from the offices of the Associated Press. You know, that was a classic smoke-filled room. It was founded in the 1840s, founded as a cooperative of news agencies in New York City, operated very much like a cabal for a lot of its history. It was gradually forced, by a series of court decisions, to open up, and be at least a little more inclusive in its governance.

This is by no means a perfect organization, and one can point to its flaws in all sorts of ways, but one thing that it does is it behaves very differently than a lot of other news organizations today. It hasn’t fallen into the problems of polarization and temptations to fake news, and funny business with advertising and surveillance of its readers, that many other publications have done, because of its ownership structure, because, for polarization, it can’t go that way, because it’s owned by both the New York Times, Fox News and my local paper. So its ownership structure, even when there are smoke-filled rooms and even when people are flawed and so forth, the ownership structure forces it to behave with a certain kind of responsibility that other kinds of publications might be missing, when their incentive structure is toward that short-term return at all costs.

JJ: I want to draw you out on one point that I’ve seen you make. We’ve been encouraged, I think, to subtract racism from the financial crisis narrative, even as we have testimony of banks specifically targeting communities of color, for pushing these subprime mortgages, calling them “ghetto loans.”

But the flip side, if you will, is that groups, including Black Lives Matter, talk about alternative economic models, talk about collective ownership. But these connections in the media are obscured, between an antiracism conversation and an economic justice conversation. They get separated, and we don’t see that, in fact, folks are making those connections all the time.

NS: Oh yeah, and those groups are doing a lot more than talking, and they have been for a long time. There’s a hidden history that runs through our social movements in this country—including labor movements, and civil rights and racial justice movements, immigrant rights movements and so forth—where we see the acts of resistance when they appear on the street, we see the protests, we see the conflicts with police, in the media much more than we see the large efforts to build alternative economies that work beneath them.

I spent the first ten years of this crisis covering resistance. And I had these mentors who had been involved in the civil rights movement and so forth; they were advising me on how to cover stories of resistance better. And then when I started getting interested in this cooperative tradition, I asked them, “So were you developing cooperatives too?”

And they said, “Yeah, of course, everywhere we went, we were developing black farmworker cooperatives, we were developing credit unions.”

You know, Martin Luther King tried to set up credit unions and was rejected charters, because he saw this as crucial to building the strength that’s required to resist.

And the Black Lives Matter policy platform, more recently, includes more than 40 references to cognates of the word “cooperation,” and that’s partly because it was written by longstanding activists and organizers in developing a strong, cooperative economy, who knew what they were doing. So this is a longstanding piece of our legacy of resistance movements in this country, something that we need to learn to tell the stories about better.

The Onion (2/14/18)

JJ: The Onion headline, “‘No Way to Prevent This,’ Says Only Country Where This Happens,” about gun violence, is a painful joke about how we don’t see what we don’t see. And then we predicate things on the nonexistence of ideas that we’re just choosing to ignore.

“Single payer could never work!,” you know.

“Well, but what about these countries where it’s….”

“No, no, it could never work.”

How important is media in putting forward and sharing and disseminating alternative economic ideas (and that’s all kinds of media)?

NS: Especially in a moment where media is not just something people are passively taking in, but it’s something that they’re engaging with and practicing, in the age of social media. As we engage with Facebook or Twitter or something, we are learning economic lessons, whether we know it or not.

And the more that we take for granted the notion that these are companies that should be controlled solely for the sake of investor returns, that they should be governed, as Facebook is, essentially as a kind of kingship, we’re learning those lessons.

And, actually, we really can organize these things differently. Both Facebook and Twitter have, at various times in their history, referred to themselves as utilities; they should be owned and governed like utilities. We look to models like Associated Press, or models like the rural electric utility cooperatives, where ratepayers of electric supply are the ones who own the companies that are providing their service. And the opportunity for this kind of model in our media is much greater than I think we allow ourselves to realize. The history demonstrates that this is possible. And the more we forestall these kind of models, the more we’re actually educating ourselves into thinking that there is no other way.

Occupy Wall Street (cc photo: Jim Naureckas)

JJ: Let me just ask you, finally, this mid-September also marks the seven-year anniversary of Occupy Wall Street. For many, one of the most heartening, critical uprisings in recent memory.

I resent the way elite media ignored and misrepresented Occupy, but mostly the way they suggested that it was up to them to say what it meant, and when it was over, and then what did “we all” learn from it. What, for you, is the legacy or lasting impact of Occupy? How would you have folks place it in history?

NS: I think it was a moment where, you know, a generation had just elected Barack Obama. There was a great deal of energy around that experience. And then very quickly, people [were] in the midst of this incredible cataclysm of the financial crisis, and Obama’s fairly modest capacity to bring about serious reform, it was a moment where people had to step back from the options that were being offered to them in electoral politics, and remind themselves what they were really seeking.

And that was part of why they were hard for the mainstream media, a lot of times, to acknowledge and understand, because they were not just choosing from among the options presented to them.

My book about Occupy Wall Street, Thank You, Anarchy, is a kind of close-up account of that process, that rationale, the reasoning for why people chose that kind of strategy rather than simply choosing from among certain choices of policies presented to them.

And this project on cooperatives really came out of that one. It was about a lot of those same people having to figure out how to live in this economy after the the protests died down. They turned to cooperative enterprise as a strategy for creating options that they could really live with and really thrive with, rather than simply entering into the kinds of options that the investor-driven economy was offering them.

JJ: We’ve been speaking with Nathan Schneider. His new book is Everthing for Everyone: The Radical Tradition That Is Shaping the Next Economy. It’s out now from Nation Books. Nathan Schneider, thank you for joining us this week on CounterSpin.

NS: It’s a pleasure. Thanks for having me.

Rich People Broke America and Never Paid the Price: Lehman Brothers collapsed ten years ago, exposing a rotten system run only by greed. In an alternate universe, things actually changed.

(Photo by ROBYN BECK/AFP/Getty Images)

What will you be doing on September 15, this year? Saturday marks ten years since the collapse of Lehman Brothers, the largest bankruptcy in US history and the trumpet that sounded the start of a global economic crisis. Clever financial “products” broke, setting off a cataclysm of joblessness and homelessness across the country and abroad in the aftermath of which we still dwell. This is important. Former Lehman employees will reportedly be having secret celebrations. Yet if there are mass marches or liturgies of mourning planned, I haven’t heard about them.

Maybe there’s still time to make some kind of ritual up.


The obvious, minimum observance, I would think, would be a mass march down Wall Street and around the Lower Manhattan’s Financial District. I know, from my traipsing around with Occupy Wall Street, how cathartic such rituals of return can be. Even if much of high finance has decamped to Midtown Manhattan or somewhere else along the high-frequency trading wires, that old downtown of America’s largest city has more symbolic heft. The march might be raucous and wild, like most marches were in the Occupy days. But the generation that came into adulthood during the crisis has grown older. Maybe they would be more inclined to something quiet, like holding up their student loan bills with the silent resignation that survival has taught them. Or perhaps they would brandish their parents’ foreclosure files or some other document marking them as the first American generation to be less well off than the one before it.

Then again, Americans have had many marches of questionable utility lately. In his forthcoming guide How We Win, veteran activist George Lakey encourages organizers to avoid marches and rallies altogether in order to take more creative—and effective—action. The goal, instead, might be to hit Wall Street where it hurts, like with a “move your money” campaign in which those who still have accounts at big banks transfer their savings over to community-owned credit unions. The more courageous among us might opt for a debt strike, agreeing together to stop debt payments, stemming the banks’ cash-flow until some demand or other is met. 

But then we would have to think of a demand.

The trouble that makes this occasion so awkward to memorialize is the lack of imagination about it. After the Great Depression, Americans got Social Security, financial reforms, protections for unions, and a massive federal jobs program. After the Great Recession, they got corporate bailouts and Obamacare, plus a few new regulations now in the process of being undone.

Sure, markets have rebounded; banks and investors are swimming in profits again. Unemployment is way down, even if wages are still mainly flat. But the basic ingredients of the decade-old crisis are still there, and some prognosticators are expecting another collapse sooner than later. Nothing has really changed, but what if it had? There would be more to celebrate.

Consider a universe, for instance, in which September 15 has become an opportunity. Emboldened by the loss of an establishment candidate in the last election, lawmakers choose that day to pass the most ambitious economic reforms in a generation. The package enables credit unions to grow so as to challenge investor-owned banks head-to-head, and it sets out simple limits so that, within five years, “too big to fail” will be a thing of the past. It updates century-old antitrust laws to reign in all sorts of corporate excess, including that of the online platforms whose power has undermined small retailers and local news organizations. It streamlines the process of lending to startup cooperative businesses, owned by their workers or customers. On top of this, a new sovereign wealth fund is formed, making every American a co-owner of a chunk of the economy—a new reality about which their monthly dividend checks serve to continually remind them.

Perhaps we can then be forgiven for giving in to the temptation to march. Congress sets up a desk on the National Mall where people can pick up their first check straight from their representatives. Sure, it’s a gimmick, but legislators might win approval ratings like they haven’t seen in decades.

Maybe, in yet another universe, it didn’t take us a whole decade to get the message. There, during the early aftermath of the crisis, public outrage brought about a set of commonsense reforms that both simplified and strengthened financial rules. To protect themselves from the banks’ wrath for doing so, politicians engineered a constitutional amendment that strictly constrained political contributions from the wealthy. This move opened the door to a wide range of reforms that had been quietly blocked by the wealthiest Americans for decades. The size of Wall Street relative to the rest of the economy has begun shrinking; the rate of small business creation has already skyrocketed. By forming cooperatives together for purchasing and services, these businesses have started to gain economies of scale that enable them to compete globally.

Things haven’t been perfect in this alternate reality. But in it, we’re ready to regard September 15 as a day of mourning, because at least the suffering it caused finally compelled America to change. When redemption is genuine, it becomes easier to mourn.

The universe we actually find ourselves in, of course, seems in some respects stranger than any of these alternate ones. A lot has happened since 2008, but few things have been as bizarre as the refusal to meaningfully correct the system that destroyed millions of jobs, homes, and dreams—and enabled the spread of authoritarianism around the world.

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This has been a brutal decade. Whatever we do on September 15, we must resist the impulse to forget how it began.

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The Bailouts for the Rich Are Why America Is So Screwed Right Now

Did they prevent a full-scale collapse? Yes. Was it necessary to do it the way we did? Not at all.

These guys got off pretty easy. (Photo by Scott J. Ferrell/Congressional Quarterly/Getty Images)

In 1948, the architect of the post-war American suburb, William Levitt, explained the point of the housing finance system. “No man who owns his own house and lot can be a Communist,” he said. “He has too much to do.”

It’s worth reflecting on this quote on the ten-year anniversary of the financial crisis, because it speaks to how the architects of the bailouts shaped our culture. Tim Geithner, Ben Bernanke, and Hank Paulson, the three key men in charge, basically argue that the bailouts they executed between 2007 and 2009 were unfair, but necessary to preserve stability. It’s time to ask, though: just what stability did they preserve?

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These three men paint the financial crisis largely as a technical one. But let’s not get lost in the fancy terms they use, like “normalization of credit flows,” in discussing what happened and why. The excessively wonky tone is intentional—it’s intended to hide the politics of what happened. So let’s look at what the bailouts actually were, in normal human language.

The official response to the financial crisis ended a 75-year-old American policy of pursuing broad homeownership as a social goal. Since at least Franklin Delano Roosevelt, American leaders had deliberately organized the financial system to put more people in their own homes. In 2011, the Obama administration changed this policy, pushing renting over owning. The CEO of Bank of America, Brian Moynihan, echoed this view shortly thereafter. There are many reasons for the change, and not all of them were bad. But what’s important to understand is that the financial crisis was a full-scale assault on the longstanding social contract linking Americans with the financial system through their house.

The way Geithner orchestrated this was through a two-tiered series of policy choices. During the crisis, everyone needed money from the government, but Geithner offered money to the big guy, and not the little guy. First, he found mechanisms, all of them very technical—and well-reported in Adam Tooze’s new book Crashed—to throw unlimited amounts of credit at institutions controlled by financial executives in the United States and Europe. (Eric Holder, meanwhile, also de facto granted legal amnesty to executives for possible securities fraud associated with the crisis.) Second, Geithner chose to deny money and credit to the middle class in the midst of a foreclosure crisis. The Obama administration supported this by neutering laws against illegal foreclosures.

The response to the financial crisis was about reorganizing property rights. If you were close to power, you enjoyed unlimited rights and no responsibilities, and if you were far from power, you got screwed. This shaped the world into what it is today. As Levitt pointed out, when people have no stake in the system, they get radical.

Did this prevent a full-scale collapse? Yes. Was it necessary to do it the way we did? Not at all.

Geithner, Bernanke, and Paulson like to pretend that bank bailouts are inherently unpopular—that they were wise stewards resisting toxic (populist) political headwinds. But it’s not that simple. Unfair bank bailouts are unpopular, but reasonable ones are not. For an alternative, look at how a previous generation of Democrats handled a similar, though much more serious, crisis.

In 1933, when FDR took power, global banking was essentially non-functional. Bankers had committed widespread fraud on top of a rickety and poorly structured financial system. Herbert Hoover, who organized an initial bailout by establishing what was known as the Reconstruction Finance Corporation, was widely mocked for secretly sending money to Republican bankers rather than ordinary people. The new administration realized that trust in the system was essential.

One of the first things Roosevelt did, even before he took office, was to embarrass powerful financiers. He did this by encouraging the Senate Banking Committee to continue its probe, under investigator Ferdinand Pecora, of the most powerful institutions on Wall Street, which were National City (now Citibank) and JP Morgan. Pecora exposed these institutions as nests of corruption. The Senate Banking Committee made public Morgan’s “preferred list,” which was the group of powerful and famous people who essentially got bribes from Morgan. It included the most important men in the country, like former Republican President Calvin Coolidge, a Supreme Court Justice, important CEOs and military leaders, and important Democrats, too.

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Roosevelt also ordered his attorney general “vigorously to prosecute any violations of the law” that emerged from the investigations. New Dealers felt that “if the people become convinced that the big violators are to be punished it will be helpful in restoring confidence.” The DOJ indicted National City’s Charles Mitchell for tax evasion. This was part of a series of aggressive attacks on the old order of corrupt political and economic elites. The administration pursued these cases, often losing the criminal complaints but continuing with civil charges. This bought the Democrats the trust of the public.

When Roosevelt engaged in his own broad series of bank bailouts, the people rewarded his party with overwhelming gains in the midterm elections of 1934 and a resounding re-election in 1936. Along with an assertive populist Congress, the new administration used the bailout money in the RFC to implement mass foreclosure-mitigation programs, create deposit insurance, and put millions of people to work. He sought to save not the bankers but the savings of the people themselves.

Democrats did more than save the economy—they also restructured it along democratic lines. They passed laws to break up banksthe emerging airline industry, and electric utilities. The administration engaged in an aggressive antitrust campaign against industrial monopolists. And Roosevelt restructured the Federal Reserve so that the central bank was not “independent” but set interest rates entirely subservient to the wishes of elected officials.

In 1938, Franklin Delano Roosevelt offered his view on what causes democracies to fail. “History proves that dictatorships do not grow out of strong and successful governments,” he said, “but out of weak and helpless ones.” Did the bailouts of ten years ago work? It’s a good question. I don’t see a strong and vibrant democracy in America right now. Do you?

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Matt Stoller is a fellow at the Open Markets Institute. He is publishing a book on the history of monopoly power for Simon and Schuster. Follow him on Twitter.

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Greedy Bankers Are Already Creating the Next Financial Crisis

Banks have record profits, but Democrats and Republicans both seem determined to play with disaster.

It’s a good time to be a banker in America. Tax cuts that disproportionately benefited the rich passed last year, making it way easier for the top 1 percent—many of whom are in the financial sector—to spend big on luxury travel or new houses or just stash cash in offshore accounts. Banks just enjoyed their most profitable quarter in history. And the Trump administration has been corroding the Consumer Financial Protection Bureau (CFPB), the agency set up after the last financial crisis to guard regular people against abusive behavior from banks and other institutions.

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But on Tuesday, Congress apparently decided that Wall Street needed a helping hand, passing a significant rollback of post-financial crisis banking regulationsimposed under Barack Obama. By doing so, experts on financial regulation said, lawmakers of both parties made another crisis that much more likely—while making it harder to see disaster coming until it’s too late.



The proposed law has now passed both chambers of Congress and is expected to be signed by Trump. Tellingly, it had the support of moderate Democrats who have taken plenty of money from the banking industry like US senators Heidi Heitkamp of North Dakota and Tim Kaine of Virginia (a.k.a. Hillary Clinton’s running mate). It was framed by backers as a sensible measure easing the “burden” of regulations on small- and medium-sized banks that don’t pose a massive danger to the economy—or at least aren’t as worrisome as the JP Morgan Chases of the world. Specifically, it cuts the frequency of stress tests—basically, check-ups by the feds to see how ready the banks would be to sustain huge losses like they did during the financial crisis—for medium-sized banks, and eliminates them entirely for the smallest ones.

But as the New York Times reported, even the biggest banks are now slated to get less oversight from the feds about their own internal accounting and debt loads. Basically, the incentives are being aligned here for bankers of all stripes to be more reckless about loading up on shady assets. Those assets could be subprime mortgages like the ones at the heart of the last crisis, increasingly popular green-energy home improvement schemes that put borrowers on the path to foreclosure, or some new “innovative” financial product that has yet to catch regulators’ attention. The bill also guts the “living will” requirement that banks have detailed plans for how to fold in the event they teeter on the brink of collapse, as so many did in 2008.

This is a big deal. Remember when a bunch of the biggest lenders in the country either disappeared or had to get bought up to avoid a total stock market crash? The 2010 Dodd-Frank bill forced banks to at least attempt to be ready to prevent that kind of too-big-to-fail madness. And while the killing of that rule only applies to banks with under $250 billion in assets, in 2007 and 2008 that threshold included some of the notorious meltdown institutions, like Countrywide and IndyMac.

“One of the lessons from the financial crisis and the housing crisis is we really did not have much forewarning that it was going to get very ugly very quickly,” Brad Miller, a former Democratic congressman from North Carolina who helped write the 2010 Dodd-Frank financial reforms, said in an interview. “The next crisis may come from practices that we’re being told not to worry about. We were certainly told not to worry about much of anything a decade ago.”

It’s not just liberals or bank haters or populists who are pissed off or even downright worried about this stuff either. When the Senate version of this bill was about to pass in March, none other than the Wall Street Journal editorial page, hardly a bastion of left-wing sentiment, warned that while softening regulations on little banks made sense, easing “capital and liquidity standards for the giants will make the financial system more vulnerable in a panic.”

“This is part of a broader trend,” Sheila Bair, the former chair of the Federal Deposit Insurance Corporation (FDIC), told me, referring to a “slippery slope” of letting banks load up on debt.

“This coming absolutely at the wrong time,” Bair added, noting that student debt, credit card debt, and other kinds of exposure were entering worrisome territory. “There is no reason to do this. Banks are fat and happy. There’s no evidence of any kind of credit shortage—on the contrary, credit standards are loosening. That typically happens toward the end of the cycle [of growth]. Lending standards start to loosen…. They should be preparing for the next downturn.”

The bill will also, as the Times reported, make it easier for shady lenders to operate without scrutiny from the feds. This matters because America has a long and storied tradition of banks and other financial institutions discriminating against people of color. Most notoriously, this consisted of “redlining,” or refusing (or just complicating) the issuance of loans to people in suspect—read: nonwhite—neighborhoods. It’s not shocking that President Trump, who along with his father has been accused of housing discrimination in his buildings, would support such a measure, but that Democrats would be on board with such a throwback policy is stunning when they are simultaneously trying to seize the mantle of reform in government ahead of the 2018 midterms.

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“It was just an extinction event for the African American middle class,” Miller, the former Congressman, told me of the housing market’s collapse between 2006 and 2008. “When you have a home, when you own your own home, you’re in the middle class. When you lose your home to foreclosure, you really lose your membership in the middle class. The effect on the African American middle class, and a somewhat lesser extent on the Latino middle class, was catastrophic. And a lot of those provisions to get at, to identify racial disparities—those requirements have been eliminated.”

So even when they aren’t being bilked by fake accounts set up in their name or charged phony and excessive overdraft fees, consumers will face the prospect of doing business with unchecked predators preying on people of color. And while it’s old news that the American legal and financial systems are set up to make the rich richer at the expense of everyone else, the risk to everyone from another crash is growing—fast.

“It’s 2006 all over again,” Bair, the former FDIC chair, told me, adding, “It wasn’t that long ago and people already want to forget. I guess the campaign donations trump memories.”

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