This report assesses today’s Senate Banking hearing on the Fed’s proposal to own and operate FedNow to speed U.S. adoption of faster payments (see FSM Report PAYMENT17). With the Fed today refusing to establish its own policy parameters until it has reviewed comments, Senate discussion followed prior partisan lines without any clear indication of likely legislative action unless or until the shape of the Fed’s own program is clear. In an interview after the hearing, Sen. Pat Toomey (R-PA) suggested that legislation might be necessary without a clear Fed commitment to eschew volume pricing, but other Republicans were less emphatic about intervention even as Chairman Crapo (R-ID) and others criticized Fed entry. However, other GOP senators (e.g., Sen. Jerry Moran, R-KS) sided with Democrats who pressed for Fed entry on grounds that it protects community banks from a “monopoly” big-bank system. Sen. Van Hollen (D-MD) pressed issues in his legislation (see FSM Report PAYMENT16), but the odds of action on it in the Senate are nil; we shall assess potential House action in our report tomorrow on the HFSC Task Force on Financial Technology hearing on faster payments.
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