Speaking at today’s US Senate hearing on cryptocurrencies, entitled “Examining Regulatory Frameworks for Digital Currencies and Blockchain,” Senator Sherrod Brown compares Facebook’s Libra project, an upcoming digital asset and payments system, to subprime mortgage loans that triggered the global financial crisis of 2008.
“Before they blew up the economy in 2008, bankers were pitching an innovative new product called subprime mortgages. Like Facebook, which claims its new currency will help the unbanked and the underbanked – a bit of an afterthought, I think, as they were selling it – these mortgages were supposed to help people who never had access to credit achieve the American dream of homeownership. In reality, these mortgages ripped off millions of families who ended up losing their homes. They wrecked the economy. They made the staggering inequality in this country even worse.
The only innovative thing about the financial crisis was how the banks managed to stick everyone else with the bill – not exactly the kind of innovation most of us were hoping for.
So I’m all for innovation, especially if that innovation delivers on its promises of improving people’s lives. But big tech companies, Wall Street banks are hiding behind innovation as an excuse to take over important public services we all benefit from and should all have a say in.
There are some things – our currency, our payment system, the protection of our savings accounts – that everyone in the country has a stake in. We shouldn’t be handing those kinds of public resources over to wealthy special interests so they can squeeze more profits out of ordinary Americans.
Think how hard it is to get quality service from Comcast, to know how your privacy was invaded by Facebook, or to know how much of your personal data was leaked by Equifax, and we just learned in the past 24 hours, Capital One. Who’s next? We don’t know. So we should be a little suspicious when someone tells us that only big corporations can be trusted to provide critical public services.”