US lawmakers set to grill Facebook executive in charge of Libra

Posted at 9:13 AM, Jul 16, 2019

The first of two Congressional hearings this week on Libra will kick off Tuesday. Facebook executive David Marcus will testify before the Senate banking committee at 10 am ET.

Libra, the cryptocurrency developed by Facebook, prompted a swift and critical response from many lawmakers after Facebook unveiled it last month.

Members of the Senate now want to understand more about Libra and its implications both for consumers and global financial systems. They will probably focus closely on data privacy concerns, an issue top of mind for legislators after a series of Facebook scandals.

Marcus, who oversees Libra, will attempt to convince lawmakers of the digital currency’s potential benefits and Facebook’s willingness to work with regulators on its implementation.

“I expect that this will be the broadest, most extensive and most careful pre-launch oversight by regulators and central banks in FinTech’s history,” Marcus said in prepared remarks released ahead of the hearing.

This set of lawmakers has been trying to understand Libra for some time. Weeks before the official Libra announcement, with rumors of the plans swirling, the Committee sent Facebook a letter requesting information on how Libra would work and how users’ data would be protected.

Facebook said it met with lawmakers and regulators in the lead-up to the announcement, including with Federal Reserve Chairman Jerome Powell.

Last month, committee member Elizabeth Warren tweeted that Facebook already “has too much power and a terrible track record when it comes to protecting our private information.” Warren, a Democratic presidential hopeful, has made breaking up Big Tech companies a key talking point in her campaign.

Sherrod Brown of Ohio, the most senior Democrat on the committee, has also repeatedly criticized Facebook’s plans for Libra. He said last week the currency could pose a “threat to our democracy” if it were to become such a widely used medium of exchange that it compromised the Fed’s ability to enact monetary policy.

“They’re motivated by one thing: surely their own bottom line,” Brown said last week. “Allowing Big Tech companies to take over the payment system or position themselves to influence monetary policy would be a huge mistake.”

But Facebook says Libra and its governance organization, the Libra Association, will not aim to supplant the Federal Reserve or any other central bank.

“The Libra Association … has no intention of competing with any sovereign currencies or entering the monetary policy arena,” Marcus said in his remarks.

The company also says it has mechanisms in place to ensure privacy and to address many of the lawmakers’ other stated concerns. Marcus will have a chance to explain that Tuesday, as well as during a hearing before the House Financial Services committee Wednesday.