Slideshow

‘A rogue regime can weaponize this agency’: Comments of the week

April 18, 2019 10:00 PM

Readers debate the Federal Reserve's potential entry into real-time payments, consider the Consumer Financial Protection Bureau's guidance for assessing fines, discuss the efficacy of financial education programs and more.

Kathleen Kraninger, director of the Consumer Financial Protection Bureau (CFPB), waits to begin a House Financial Services Committee hearing in Washington, D.C., U.S., on Thursday, March 7, 2019. Chairwoman Maxine Waters is seeking information from the CFPB about recent settlements that did not include consumer relief and asking staff employees to blow the whistle on actions they see as weakening consumer protection. Photographer: Andrew Harrer/Bloomberg

Andrew Harrer/Bloomberg

On an argument that the Consumer Financial Protection Bureau should offer more transparent guidance on penalties firms face in response to enforcement actions:

"First problem with telegraphing fines is financial institutions will risk assess that in their decision making process. Wells Fargo for example might find it worth the risk, and do it anyway based on the penalty if caught. Remaining unpredictable makes it never worth the risk, because the freedom to increase enormously is always on the table. Down side is a rogue regime can weaponize this agency, and those with socialist intentions can change the market or kill a market based on emotions."

Related: CFPB has too much flexibility in assessing fines

An eagle sculpture stands on the facade of the Marriner S. Eccles Federal Reserve building in Washington, D.C., U.S., on Friday, Nov. 18, 2016. Federal Reserve Chair Janet Yellen told lawmakers on Thursday that she intends to stay in the job until her term expires in January 2018 while extolling the virtues of the Fed's independence from political interference. Photographer: Andrew Harrer/Bloomberg

Andrew Harrer/Bloomberg

On The Clearing House, which has created its own real-time payments network, arguing why the Fed should not build its own:

"Every single one of the arguments by the head of the Clearing House made in this article is bogus. There isn’t enough room in the comment box to address each bogus argument, but I’ll note 2: 1) To call The Clearing House RTP system the world’s most advanced electronic payment system is a joke. It is just a sped up version of the existing ACH system, using software purchased from the British RTP system. The Indian and Chinese systems are more modern. 2) A FRB built system could be more secure."

Related: Fed entry into real-time payments would do more harm than good

Jerome Powell, a member of the board of governors at the Federal Reserve System, speaks during a Bloomberg Television interview during the Jackson Hole economic symposium, sponsored by the Federal Reserve Bank of Kansas City, in Moran, Wyoming, U.S., on Friday, Aug. 26, 2016. Powell commented on the U.S. economy and Federal policy. Photographer: David Paul Morris/Bloomberg

David Paul Morris/Bloomberg

On a look at community banker concerns about pricing for real-time payments depending on whether the system is run by TCH alone or with the Fed:

"There are additional operational and competitive concerns associated with having only one provider for any payments ecosystem. On the operational front, some large merchants employ "diversified redundancy" when processing payments. Essentially this means they use two completely unrelated but redundant systems to process. Every important payment ecosystem should follow this model as recent European outages attest to. Competition is not served when should be competitors join together."

Related: Community bankers alarmed after big banks backtrack on faster-payments pricing

On the latest in a legal fight over an expanded National Credit Union Administration field-of-membership rule:

"I thought credit union membership was predicated on whether the prospective member is able to fog up a mirror."

Related: Is credit union regulator's field-of-membership appeal already in trouble?

JOHN SOMMERS II

On an argument that banks need to step up their services to low-income consumers rather than focusing on financial education:

"Climate change deniers, anti-vaxxers, and now shade thrown at FinEd? Conclusive evidence financial literacy doesn't work?!? Hardly. Several studies have documented a strong relationship between financial literacy and determinants of success. When only one in four US teens understand the concept of compound interest (OECD PISA study), it's clear we need to promote financial knowledge --not just better products. Teaching history may not stop wars, but let's not call for an end to the subject."

Related: The problem with Financial Literacy Month

Man working on a project using futuristic digital tablet

Kirill - stock.adobe.com

On an argument that open banking presents an opportunity for banks to help corporations deal with the tidal wave of consumer data coming available:

"Yup, an opportunity for more data compromises and more annoying emails and ads directed at consumers."

Related: Open banking is an opportunity

Vacclav - stock.adobe.com

On an argument that new White House oversight of Federal Reserve and other agency guidance could actually slow down deregulatory efforts:

"Would I rather a process in place that stops the issuance of burdensome guidance but may hinder the speed of regulatory reform, or would I like to have no process in place to stop the issuance of burdensome guidance so regulatory reform can be issued much quicker? Easy choice."

Related: Will White House memo be a roadblock for reg relief?