It’s long seemed that nothing could unite President Donald Trump and Democrats on Capitol Hill. Then Facebook Inc. decided to create a cryptocurrency.
Washington’s bipartisan distrust of the social-networking giant will be on display this week as it defends the digital-money proposal in two congressional hearings. In a sign that the testimony is likely to be an ordeal for Facebook, Trump took to Twitter on Thursday to bash the effort.
The presidential lashing was just the latest setback for Facebook, which rolled out its plan for a token called Libra in June –- a move that many policy makers called hubristic and ill-timed, considering the political turmoil that continues to swirl around the company. Last week, Facebook agreed to pay about $5 billion in a record privacy settlement with the Federal Trade Commission.
Facebook’s traditional pre-hearing courtesy visits to discuss Libra in the House and Senate aren’t going well, according to interviews with lawmakers and congressional staff. While the company has taken pains to describe its initiative in utopian and futuristic terms, lawmakers have been more interested in data security, the company’s awesome market power, and why it decided to base the operation outside the U.S.
“Look at their arrogance, look at their role in the 2016 presidential campaign, look at the fact that they’ve rarely shown any contrition on much of anything,’’ Senator Sherrod Brown of Ohio, the Banking Committee’s top Democrat, said in an interview. “There’s going to be a group of us that’s going to demand some real information.’’
Complaints about Libra haven’t just come from politicians. Trump-appointed Federal Reserve Chairman Jerome Powell told lawmakers last week he has “serious concerns’’ about the token and cast doubt on Facebook’s timeline for launching it by next year. He also warned that the U.S. regulatory system may not be equipped to handle the enormous digital payment system envisioned by Facebook, which has more than 2 billion users.
Democrats, including Financial Services Committee Chairwoman Maxine Waters of California, have already demanded that the company put its plans on hold while Congress investigates. Republicans, though less vocal, also haven’t been supportive.
Power to Dominate
The controversy around the project, however unwanted by Facebook, nevertheless highlights the company’s power to dominate policy debates and, to some extent, set the agenda in Washington. Until Facebook jumped in a few weeks ago, cryptocurrency was more of a fringe issue that attracted an unusual crowd of libertarians, speculators and blockchain geeks. Many in Congress were uninterested.
The stakes are high for both Facebook and the broader digital coin industry as David Marcus, a top executive at the company, prepares to testify before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday.
When asked for comment, a company spokeswoman pointed Bloomberg to a blog post Marcus published after the plan was unveiled, and to letters he wrote to lawmakers where he said the company was eager to work with regulators and governments. “We can’t do this alone,” Marcus wrote.