Banks are using their long-established relationships on Capitol Hill and in regulatory agencies to undermine a relative newcomer struggling to get traction in Washington: the tech industry.
The battle illustrates the extent to which the growing distrust of major technology companies has exposed the industry to attacks from all sides in Washington, fueled by the firms' attempts to gain footholds in more parts of the economy. Bank lobbyists are looking to leverage those concerns. "Banks originally viewed themselves as impregnable bastions — just like hotels and taxis and retailing," said Karen Petrou, who advises bank executives on policy trends. "But enough of the industry has realized that complacency is a really dangerous competitiveness strategy."
Concerns over Libra spurred the Independent Community Bankers of America, which represents smaller lenders, to join forces with Waters, a California Democrat, in calling for a moratorium on the project. Waters' House Financial Services Committee staff promoted the group's position in a briefing memo circulated to members before an Oct. 23 hearing with Zuckerberg.
Facebook has said it expects major banks to join the Libra effort, but it concedes that others in the finance industry will resist.Bank regulators in Washington and overseas have signaled they plan to crack down on Facebook's plans to launch Libra. A G-7 task force warned of potential "significant adverse effects" from the kind of digital currency that the company is envisioning, and Federal Reserve Chair Jerome Powell said Libra raises "many serious concerns.
At issue is a growing concern among bankers that tech companies will try to establish lending arms by winning bank licenses as so-called industrial loan companies — a type of charter available in certain states that enables non-financial companies to open banking units.
This is no surprise. If Facebook injects a new currency into the financial system without any rules governing the movement of the money, Facebook is a direct threat to the integrity of our financial system.
Ah yes, the 'free market' at play. Instead of innovating, put up road blocks to others that are doing so. A page right out of the book of the fossil industry.
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