Washington Tees Off On Facebook; Senate to Hear from CU’s on Pot Banking and Main Street is where the $ is

July 17, 2019 at 10:06 am Leave a comment

Today is the last day of the blog until I return from a week’s vacation on July 29th. Here is some info I wanted to make sure you knew before I head to Cape Cod this weekend.

Facebook cemented its status as the latest company everybody loves to hate. The US Senate Banking Committee held a hearing yesterday Scrutinizing Facebook’s plans to introduce a block chain cryptocurrency for Consumers sometime next year. As expected. reactions to the plan ranged  from polite skeptical to hysterical.

In the polite skepticism category is this quote in the American Banker from committee chairman Mike Crapo “Despite the uncertainties, Facebook’s stated goals for the payments systems are commendable,” Crapo said. “If done right, Facebook’s efforts to leverage existing and evolving technology and make innovative improvements to traditional and nontraditional payments systems could deliver material benefits, such as expanding access to the financial system for the underbanked, and providing cheaper and faster payments.”

In the hysterical category is this quote from the committee’s ranking senator, Democrat Sherwood Brown: “Facebook is asking people to trust them with their hard-earned paychecks,” said Brown. “It takes a breathtaking amount of arrogance to look at that track record and think, you know what we really ought to do next? Let’s run our own bank and our own for-profit version of the Federal Reserve for the world.”

With all due respect to the senator, a company started in 2004 as a dorm room platform to categorize coeds that grew into the world’s dominant communication platform is entitled to a little breathtaking arrogance. Besides, this country has been breathtakingly slow and arrogant to adopt payment system Innovations. It’s time to give the private sector a turn. The sky is not going to fall. It isn’t time to start the campfire with dollar bills

Upcoming hearing on Cannabis Banking

Speaking of the Senate Banking Committee, it will be holding a cannabis banking hearing on July 23rd and the concerns of credit unions will be front-and-center.

Rachel Pross, the chief risk officer of Maps Credit Union in Oregon,  is scheduled to be the lead speaker on the committee’s second panel following comments by senators Gardner and Merkley, both of whom represent States that have legalized cannabis.

The Credit Union has been on the cutting edge of providing banking services to marijuana businesses. In testimony before a House committee earlier this year Pross explained that the credit union has been providing these services since 2014 when Oregon voted in a referendum to legalize cannabis.

The conventional wisdom is that the House has the votes to pass legislation permitting  states which have legalized marijuana, to continue to do so without violating federal law but it will take a much bigger lift to get this done  in the Senate.

 Consumer Banking Heats up as Investment Banking Cools

The all-important earnings season, when publically traded company’s announce and put their best spin on their quarterly earnings is here. If current trends continue expect the big guys to continue to move aggressively to expand their consumer banking presence.

There is no better bellwether for the state of U.S. banking than JPMorgan Chase so here is a link to information about it second quarter earnings report. Page 3 of the press release demonstrates that  the behemoths are growing by capitalizing on consumer banking. The WSJ points out this morning that while the American consumer is generally in a good mood businesses which generate money for investment are much less sanguine about the economic outlook. Expect to face even more competition.

 

 

Entry filed under: Advocacy, Compliance, Economy, General. Tags: , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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