Real-time Payments

thank you mister chairman and welcome mister chairman and thank you for your leadership as you know from previous questions, I've asked you with these hearings. I've been very frustrated very frustrated about the lack of the development of a real time payment system at the federal Reserve there are some questions in the House yesterday about this as you acknowledge the Fed has been looking at this for five or six years in the meantime every day that goes by The lack of a real time payment system is costing millions of Americans lots of money and over of course of the year, we're talking about millions of Americans losing billions of dollars especially those who are going paycheck to paycheck the same time other countries great Britain, the EU countries. Lots of other countries have gotten there before us and there's no reason we should have gotten there a long time ago in the meantime because of lack of progress, there's been more momentum for A defacto private sector version through the consortium of big Banks, the clearing House and there's lots of concerns about that system mister Honig who was formerly the vice chair of the DC and Bruce Summers formally the Fed recently wrote an editorial about their concerns with the largest banks in the country controlling the payment system and I just want to quote from their article and they say the needs of consumers and businesses And the depository institutions nationwide that provide them services will be best served by the Federal Reserve, continuing to play its role as a payments processor The alternative we believe is to award the clearing House a defacto monopoly resulting in a less competitive and less efficient market for immediate payments question Do you share the concerns they expressed in that editorial senator as you I'm sure no we actually have a proposal out to provide a real time settlement system 20 - 47360 - five and ask the public to comment on that we send it out late last year We've got several hundred 900. I think comment letters and all that and there's been this proposal came out of our our faster payments initiative. We chose to pull people together as you know not to cut you off. But when do you expect to get this done? I mean this I mean again. Other countries have done. This is not that complicated. It's it's really just a question of making a decision so do Express by those two individuals in their editorials and let me as you as you think about your answer I wanna point out that two and a half years ago when the big Bank consortium was preparing to launch a real time payment system, they told the Department of Justice that they would charge the same price to all depository institutions regardless of their size about a year later the Justice Department sited that assurance when it told the clearing House that had no intention to take any antitrust action Against them but last month the clearing House added a big caveat to its pledge. They said that they would only maintain that commitment if there was no other competition meaning the federal Reserve and community bankers are very worried about this here's a quote from Bob Stein is the Ceo of a 90 - Three million dollar Asset Bridge Community Bank in Mount Vernon, Ohio quote talking about the Fed. If they don't take that as a dare then I don't know what it takes for the Fed to serve as a Central, a Central Central Bank roll so We just gotta make a decision here because the lack of the Fed making a decision is essentially putting in place the defacto clearing House. Now that's the result of a deliberate decision. That's one thing but if it's the result of inaction then their their real risks at stake here we are working our way through the comments and approaching a decision and we have to wait this very carefully under the law under the Monetary Control Act and under our regulations you're absolutely right The smaller institutions are strongly in favor of of our of our doing this but there's a range of commentary. We have a process we need to go through. We've been going through it and and you know, expect to reach a decision Alright I would just be concerned with providing the biggest banks, a monopoly over this big, an area of transactions