Van Hollen, Brown, Warren Underscore Support of “FedNow” Real-Time Payments System in letter to Fed

U.S. Senators Chris Van Hollen (D-Md.), Sherrod Brown (D-Ohio), and Elizabeth Warren (D-Mass.), all members of the Senate Banking Committee, have written to Federal Reserve Chairman Jerome Powell to underscore their support of the proposed “FedNow” service to support real-time payments.

The Senators write, “Real-time payments would result in significant economic benefits for working families and small businesses. Currently, the largest Wall Street and foreign banks control the only real-time payment system. FedNow would level the playing field for community banks and credit unions by providing guaranteed access to institutions of all sizes.”

They stress, “A single real-time payments system run by the biggest banks would place too much control over critical public infrastructure in the hands of Wall Street interests, harming fair competition and increasing financial system risk. We agree with community banks, credit unions, and consumers that the Federal Reserve must provide a universally accessible, real-time payments system to address these concerns and ensure fairness for Main Street.”

They close the letter stating, “We applaud the Federal Reserve for taking this important step, and we urge you to continue your work to ensure a safe and secure real-time payments system for all Americans.”

Senator Van Hollen has repeatedly pressed the Fed to move forward on a real-time payments system. In August 2018, Senator Van Hollen sent a letter to the Federal Reserve urging them to move forward on implementation of a real-time payments system. Following the letter, in July 2019, Van Hollen, joined by Senators Elizabeth Warren and Representatives Ayanna Pressley and Chuy Garcia introduced legislation requiring the Fed to take action. Senator Van Hollen has also raised this issue at hearings with Federal Reserve Chairman Jerome Powell, Vice Chairman Randy Quarles, and Board Member Michelle Bowman. In August 2019 – following these pushes from Senator Van Hollen –  the Fed announced its plan to move forward, and the Senator again stressed the importance of this decision at a hearing in September.

The text of the letter is available here and below.

Dear Chair Powell:

We write to express our strong support for the Federal Reserve’s proposal to create “FedNow,” a settlement and clearing service to support real-time payments in the United States. Real-time payments would result in significant economic benefits for working families and small businesses. Currently, the largest Wall Street and foreign banks control the only real-time payment system. FedNow would level the playing field for community banks and credit unions by providing guaranteed access to institutions of all sizes.

Since its inception, the Federal Reserve has facilitated the United States payment system, and real-time payments are no exception. In fact, The Clearing House’s Real Time Payments network would not be feasible without the Federal Reserve’s capabilities and cooperation. A single real-time payments system run by the biggest banks would place too much control over critical public infrastructure in the hands of Wall Street interests, harming fair competition and increasing financial system risk. We agree with community banks, credit unions, and consumers that the Federal Reserve must provide a universally accessible, real-time payments system to address these concerns and ensure fairness for Main Street. FedNow will promote competition, increase financial stability, and reach all depository institutions and consumers.

The Federal Reserve’s continued involvement in payments is critical to ensuring the long-term viability and resiliency of the United States payments system. This is especially true at a time when not only the biggest banks, but also the biggest technology companies and foreign countries are seeking to increase their market power in ways that has serious consequences for our financial system. We applaud the Federal Reserve for taking this important step, and we urge you to continue your work to ensure a safe and secure real-time payments system for all Americans.

Sincerely,

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