Real-time Payments System

Senator Van Hollen I thank you mister chairman thank all of you for your testimony today moving as fast as possible The real-time payments has been a priority for mine I talked to lots of witnesses that have come before this Committee on this matter because the lack of a real-time payment system is costing millions of Americans billions of dollars every year So President George I commend you for your leadership in this issue I It's an issue of thought about a lot and you've been very thoughtful in developing these proposals I've listened to testimony lot of ground has been covered I do think the fundamental question gets down to this issue of competition and I realized that the clearing House says it welcomes competition on the one hand but on the other hand all the testimony here today is let's not have a separate spent now system and it seems to me that keeping Monopoly position in the hands of 15 biggest banks is not necessarily in the long run the best deal for consumers and a little competition is a good thing in my view mister Stan, you represent lots of financial institutions and you're obviously looking out for your consumers and your customers here and you've expressed a real fear in your test Earlier statements about handing over this kind of monopoly power to this kind of a monopoly and you you actually raise before this hearing the same issue that Senator Toomey raised here which is when the Fed said it might get into the space the clearing House then said well, you know we made this promise about not engaging and you know not not changing pricing in a discriminatory way but you know we're gonna Reconsider that which in fact in my view just underscored the need to have an alternative here So can you you you're you're someone who's working this issue on the ground every day If you can just you know how we how would you explain to one of your customers coming into your Bank Why you think it's important for the Fed now system to be put in the operation Well senator thank you you know my customers Are looking to us to provide them the the fastest payment possible and I need to ride that train and the one constant in my career has been a federal Reserve and I from a pricing standpoint They've demonstrated when technology improves. They can lower my cost and they explain that to us and we understand it So I just know that we cannot lose that and we I know accessibility to every small financial It's just so critical and we're one of those and so I I'm absolutely confident the Fed is doing the right thing and we've been asking them to do it I was on the task force I was on a steering Committee It was a director worker and I've been pounding the table for them to do this all the way along the way and they are and I'm confident that will move along very quickly I saw what they did check 20 - one and how fast that revolution took place and I was part So I'm confident we can accomplish this Thank you and I would point out as the chairman knows I was it was a four to one vote on the board of the Federal Reserve. I miss Barra you've been in the Middle of this during really tough times in terms of you know financial institutions in our country and in response to question you just you just pointed out that this suggestion that we could not make the systems interoperable was kinda like the statement on Monopoly Criminal history pricing another example actually of why it's important to have an alternative right because otherwise the system with monopoly power can use that leverage in certain ways can you expand upon your concerns This is I think it's important to understand we're talking about Interbank's interbank settlements So there there are a lot of banks working with financial technology companies trying to come up with new innovative ways to help people send and manage payments that are customer facing but you still have the problem of getting the money from one Bank to Other and so if you have a monopoly provider for that piece of it all these other innovators they are working on customer interfacing services and applications will have to go to that single provider This is why you know I know the big banks love this but pretty much nobody else does there's not trust the small banks don't trust them The financial technology companies don't trust them because this will be giving them monopoly pricing power and they may say today we won't do it will be fair and equal But the Fed has no authority to regulate rates I I also agree that with President George that the best way to address this is through competition and giving smaller institutions, giving financial technology innovators working with some with those institutions and alternative, giving them two places to to to work with to deal with to support the renovations so and I would also say that the problem of trust is one of the reasons why I don't think OTP has gotten traction if there was It was a great service who can't would care whether it's gonna come in anyway, people will be jumping for it but that's not happening The public comment process is overwhelmingly said that pretty much everybody outside the big banks who own T CH want an alternative system Thank you You know like I think the history shows that competition actually Spurs innovation not stifles innovation Thank you mister chairman