Uncle Sam weighs Libra

Facebook’s David Marcus spoke before Congress on the company’s upcoming pseudo-bank, Libra. The oldies on Capitol Hill could barely conceal their contempt. Read More...

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="On Tuesday, 700 old white men, and roughly three women, gathered in Congress to ask David Marcus, the man behind Facebook’s Libra Project, why we should trust the company and how we can be sure its incipient digital currency/alternative financial system/systemic risk won’t, say, lead to the downfall of Western civilization. ” data-reactid=”19″>On Tuesday, 700 old white men, and roughly three women, gathered in Congress to ask David Marcus, the man behind Facebook’s Libra Project, why we should trust the company and how we can be sure its incipient digital currency/alternative financial system/systemic risk won’t, say, lead to the downfall of Western civilization.

The banner question: Given everything awful it’s done, how can we trust Facebook with our money?

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The honorable members of the Senate Housing, Banking and Urban Affairs Committee had convened because Facebook’s plan for a digital currency, controlled by a consortium of rich and powerful companies, seems  to be a threat to the incumbent banking system, the rule of law, consumers worldwide and, most importantly, the American dollar. We knew this already: Rep. Maxine Waters earlier this month co-signed a letter calling for the project’s immediate halt, and Treasury Secretary Stephen Mnuchin couldn’t help but give it a violent little kick, in his anti-crypto remarks last night. (And it will, presumably, be on the receiving end of further bipartisan ragging at Waters’s House Financial Services Committee tomorrow.)” data-reactid=”21″>The honorable members of the Senate Housing, Banking and Urban Affairs Committee had convened because Facebook’s plan for a digital currency, controlled by a consortium of rich and powerful companies, seems to be a threat to the incumbent banking system, the rule of law, consumers worldwide and, most importantly, the American dollar. We knew this already: Rep. Maxine Waters earlier this month co-signed a letter calling for the project’s immediate halt, and Treasury Secretary Stephen Mnuchin couldn’t help but give it a violent little kick, in his anti-crypto remarks last night. (And it will, presumably, be on the receiving end of further bipartisan ragging at Waters’s House Financial Services Committee tomorrow.)

Similarly today, it was immediately clear just how much everybody in the room hated Facebook.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Case in point: Sen. Sherrod Brown (D-OH) set the tone by ringing in the hearing with a scathing speech. “Facebook is dangerous,” he said. “It doesn’t intend to be dangerous, but it doesn’t respect the power of the technologies…they are playing like a toddler who’s gotten his hands on a book of matches, burned down the house over and over, and called every arson a learning experience.”” data-reactid=”23″>Case in point: Sen. Sherrod Brown (D-OH) set the tone by ringing in the hearing with a scathing speech. “Facebook is dangerous,” he said. “It doesn’t intend to be dangerous, but it doesn’t respect the power of the technologies…they are playing like a toddler who’s gotten his hands on a book of matches, burned down the house over and over, and called every arson a learning experience.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Sen, Martha McSally (R-AZ), later amplified Brown’s point, blasting Facebook’s track record of “failing and lying and deceiving.”” data-reactid=”24″>Sen, Martha McSally (R-AZ), later amplified Brown’s point, blasting Facebook’s track record of “failing and lying and deceiving.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“Instead of cleaning up your house,” McSally said, “you’re setting up a new business model with Libra.”” data-reactid=”25″>“Instead of cleaning up your house,” McSally said, “you’re setting up a new business model with Libra.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Other haters in the senate  pointed out that some aspects of Project Libra appeared distinctly…unamerican. Sen. Mike Crapo (R-ID) suggested that, given Facebook’s apparent desire to help America lead the way in digital currencies, it’s striking that the company has set up the Libra Association as a Swiss non-profit and will store the Libra reserves in a Swiss bank account. “We believed a universal currency would benefit from being in an international place that is also the home of many respected international organizations,” insisted Marcus. ” data-reactid=”26″>Other haters in the senate pointed out that some aspects of Project Libra appeared distinctly…unamerican. Sen. Mike Crapo (R-ID) suggested that, given Facebook’s apparent desire to help America lead the way in digital currencies, it’s striking that the company has set up the Libra Association as a Swiss non-profit and will store the Libra reserves in a Swiss bank account. “We believed a universal currency would benefit from being in an international place that is also the home of many respected international organizations,” insisted Marcus.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="One of the more inventive questions came from Sen. Tom Cotton, a devout Republican from Arkansas. Because Silicon Valley is a depraved left wing cesspit, he asked, how will Libra ensure that there is no bias against those “whose views may be disfavored in extremely liberal places like Silicon Valley?” ” data-reactid=”27″>One of the more inventive questions came from Sen. Tom Cotton, a devout Republican from Arkansas. Because Silicon Valley is a depraved left wing cesspit, he asked, how will Libra ensure that there is no bias against those “whose views may be disfavored in extremely liberal places like Silicon Valley?”

Marcus argued, simply, that the Facebook-backed cryptocurrency, er…wouldn’t do that.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="But Cotton pressed on, and here we paraphrase because, why not? You think the Dems have harassed conservatives and the Great American banking institutions, wait until you see what the leftist degenerates at Menlo Park do to them! ” data-reactid=”29″>But Cotton pressed on, and here we paraphrase because, why not? You think the Dems have harassed conservatives and the Great American banking institutions, wait until you see what the leftist degenerates at Menlo Park do to them!

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“Say a guy wants to sell a shotgun, or a Christian baker wants to practise his faith, or someone wants to buy a Breitbart subscription,” he actually said. What guarantees do we have that Facebook won’t blacklist them? ” data-reactid=”30″>“Say a guy wants to sell a shotgun, or a Christian baker wants to practise his faith, or someone wants to buy a Breitbart subscription,” he actually said. What guarantees do we have that Facebook won’t blacklist them?

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Marcus’s answer, again, was drearily pragmatic: “We should only get in the way [of conservatives’ money] in very exceptional cases,” he said. That is, in accordance with law—money laundering and stuff—not politics. ” data-reactid=”35″>Marcus’s answer, again, was drearily pragmatic: “We should only get in the way [of conservatives’ money] in very exceptional cases,” he said. That is, in accordance with law—money laundering and stuff—not politics.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="It wasn’t a total hatefest. One senator described Libra as part of a “wave of the future” while another, Sen. Pat Toomey (R-PA), extolled its plan to “bank the unbanked” (citing the data included in the Libra media package) and cautioned his fellow pols not to “strangle this baby in the crib.” ” data-reactid=”36″>It wasn’t a total hatefest. One senator described Libra as part of a “wave of the future” while another, Sen. Pat Toomey (R-PA), extolled its plan to “bank the unbanked” (citing the data included in the Libra media package) and cautioned his fellow pols not to “strangle this baby in the crib.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="All in all, Marcus fared reasonably well. The senators managed to extract a number of minor revelations from him, but he otherwise easily fielded the same four-odd questions levelled at him ad nauseum by his interrogators: ” data-reactid=”37″>All in all, Marcus fared reasonably well. The senators managed to extract a number of minor revelations from him, but he otherwise easily fielded the same four-odd questions levelled at him ad nauseum by his interrogators:

Q: How will Facebook prevent criminals from misconducting their illicit activities on the Libra network? A: It will be regulated!
Q: How can we trust Facebook not to steal all of our data? A: You won’t have to, because Facebook only has a minority vote!
Q: How do we know Facebook won’t sell off our transactional data, as it usually does? A: It won’t! Scout’s honor!
Q: Is Libra trying to compete with the dollar? A: No! Pinky swear! Trust us!

So what else did we learn?

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="A few things, actually. First, the Calibra wallet, a for-profit subsidiary created by Facebook to handle Libra transactions, will aggregate customers’ data, which will include government issued IDs customers will apparently be obligated to upload. As Marcus confirmed, there is no way to “consent” to using the application without relinquishing this data. ” data-reactid=”44″>A few things, actually. First, the Calibra wallet, a for-profit subsidiary created by Facebook to handle Libra transactions, will aggregate customers’ data, which will include government issued IDs customers will apparently be obligated to upload. As Marcus confirmed, there is no way to “consent” to using the application without relinquishing this data.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="So every overture Facebook has made to privacy is only theoretical—yes, your data won’t be harvested non-consensually, but it will be harvested once you’ve given your blessing. That said, users might be able to find other solutions that don’t their data, depending on how Libra’s open-source platform evolves, Marcus said. ” data-reactid=”45″>So every overture Facebook has made to privacy is only theoretical—yes, your data won’t be harvested non-consensually, but it will be harvested once you’ve given your blessing. That said, users might be able to find other solutions that don’t their data, depending on how Libra’s open-source platform evolves, Marcus said.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Second, it was fascinating to hear that Facebook’s business model is not, in fact, oriented around earning money. When testifying before Sen. John Kennedy (R-LA), who had asked about privacy, Marcus claimed that Facebook had never farmed customer data for the primary purpose of generating revenue, but instead to serve customers’ needs and improve the interface. “You mean to say that money is a secondary concern to Facebook?” Kennedy asked, incredulous.” data-reactid=”46″>Second, it was fascinating to hear that Facebook’s business model is not, in fact, oriented around earning money. When testifying before Sen. John Kennedy (R-LA), who had asked about privacy, Marcus claimed that Facebook had never farmed customer data for the primary purpose of generating revenue, but instead to serve customers’ needs and improve the interface. “You mean to say that money is a secondary concern to Facebook?” Kennedy asked, incredulous.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="(Most of the time, Sen. Kennedy seemed to be blithely unaware that the hearing was about Libra specifically. The great senator from Louisiana seized the opportunity to, er, grill Marcus on Russian interference in Facebook and get him to fact check a load of random newspaper articles he’d read. Never discouraged by Marcus’s complete inability to answer a single one of his questions, Kennedy pressed on, implacably.)” data-reactid=”47″>(Most of the time, Sen. Kennedy seemed to be blithely unaware that the hearing was about Libra specifically. The great senator from Louisiana seized the opportunity to, er, grill Marcus on Russian interference in Facebook and get him to fact check a load of random newspaper articles he’d read. Never discouraged by Marcus’s complete inability to answer a single one of his questions, Kennedy pressed on, implacably.)

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Still, those savvy enough to know what the hearing was about also attempted to uncover the answer to a more existential question—why, of all companies, is Facebook doing this? ” data-reactid=”48″>Still, those savvy enough to know what the hearing was about also attempted to uncover the answer to a more existential question—why, of all companies, is Facebook doing this?

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Many, including Sen. Brown and Sen. Brian Schatz (D-HI), pointed out the irony of Facebook assuming the role of saving the 1.7 billion unbanked after having spent the previous ten-odd years cheerfully pillaging human society for ad revenue. “I believe if America doesn’t lead innovation in digital currency, others will,” said Marcus, ominously. If not, he said, “we will soon see a digital currency led by others whose values are different from ours.”” data-reactid=”49″>Many, including Sen. Brown and Sen. Brian Schatz (D-HI), pointed out the irony of Facebook assuming the role of saving the 1.7 billion unbanked after having spent the previous ten-odd years cheerfully pillaging human society for ad revenue. “I believe if America doesn’t lead innovation in digital currency, others will,” said Marcus, ominously. If not, he said, “we will soon see a digital currency led by others whose values are different from ours.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="So what happens now? More to the point, what if Congress and the American people continue to militate against Libra? ” data-reactid=”50″>So what happens now? More to the point, what if Congress and the American people continue to militate against Libra?

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“If regulatory requirements aren’t met,” said Marcus, “we won’t launch…”— a moment of silence lapsed as Marcus appeared to be seriously suggesting that Facebook might very well call the whole thing off—”…until they are met.”” data-reactid=”51″>“If regulatory requirements aren’t met,” said Marcus, “we won’t launch…”— a moment of silence lapsed as Marcus appeared to be seriously suggesting that Facebook might very well call the whole thing off—”…until they are met.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Doubtless this satisfied few senators, who suggested that it might we wise to set up an entirely new regulator. At least with, say, Bitcoin, muttered Sen. Chris Van Hollen (D-MD), the volatility and godawful UX ensured it would “not be put into widespread use.” Libra, he surmised, might actually work and catch on with the masses.” data-reactid=”52″>Doubtless this satisfied few senators, who suggested that it might we wise to set up an entirely new regulator. At least with, say, Bitcoin, muttered Sen. Chris Van Hollen (D-MD), the volatility and godawful UX ensured it would “not be put into widespread use.” Libra, he surmised, might actually work and catch on with the masses.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Ultimately, the vituperative exchanges always routed back round to the central question of trust. Why should anyone believe Facebook? ” data-reactid=”53″>Ultimately, the vituperative exchanges always routed back round to the central question of trust. Why should anyone believe Facebook?

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="And each time, Marcis trotted out his defense, which was that the democratic Libra Association was designed explicitly to absolve Facebook of much of its responsibility. But, as Sen. Van Hollen said, “the Libra Association means you don’t have to trust Facebook…but you do have to trust the Libra Association.” ” data-reactid=”54″>And each time, Marcis trotted out his defense, which was that the democratic Libra Association was designed explicitly to absolve Facebook of much of its responsibility. But, as Sen. Van Hollen said, “the Libra Association means you don’t have to trust Facebook…but you do have to trust the Libra Association.”

Marcus’s answer was that the company needs a chance to “prove” itself.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="But, to the senators, it was clear that Facebook has already proven itself. “Facebook says, ‘Move fast and break things,’ and they certainly have,” Sen. Brown said at the start of the hearing. “They moved fast and broke our political discourse, moved fast and broke journalism, moved fast and incited political genocide…” ” data-reactid=”56″>But, to the senators, it was clear that Facebook has already proven itself. “Facebook says, ‘Move fast and break things,’ and they certainly have,” Sen. Brown said at the start of the hearing. “They moved fast and broke our political discourse, moved fast and broke journalism, moved fast and incited political genocide…”

Now, per Marcus, Facebook is going to move slowly. May God help us.