Confusing money laundering and overnight funding rates when speaking to the Fed chairman is embarrassing. It is positively humiliating when the confused person is also a Wharton grad.
That’s what happened to Democratic Representative from Georgia’s 13th district, David Scott.
After a brief preamble, in which Scott urged Powell to “stay strong and courageous” – maybe even join the #resistance, why not – as it is important for the world that the “Fed remain strongly independent” and both “democrats and republicans got your back”, he got right to business declaring that “this Libra business is really disturbing and it’s a serious problem. Let me tell you why…first of all, I think we all know, Libra is the London Interbank Offered Rate, very critical. It has and is the standard for the base rate for hundreds of trillions of dollars, both overnight and term loans, debt, derivatives; and it is the standard that has been used internationally and extensively in the United States, affecting individuals, small businesses, large corporations. So we got a big issue here.”
“But because of pervasive manipulation, it is apparent that Libra is going to leave us, be removed within the next year or so” he droned on, clearly seeking to impress the world with his extensive Wikipedia-derived knowledge of a major transition in the overnight funding world, where SOFR is set to replace the current regime.
Of course, the Wharton grad was off from the beginning, and instead of discussing Facebook’s attempt to control every monetary transaction with its own “cryptocurrency” token, which incidentally is anything but a cryptocurrency, was discussing Libor.
Luckily for Scott, Powell was smart enough to grasp what was going on and promptly responded to the representative’s question, without missing a beat or even correcting him.
Twitter, however, was far less forgiving and during today’s House Panel hearing, which was less about monetary policy and more about a free ad for Facebook’s attempt to compete with Bitcoin, unleashed a wave of far more appropriate responses, to wit:
Libra, Libor, who cares, shut up and cut rates
— GreekFire23 (@GreekFire23) July 10, 2019
everyone in congress demanding Zuckerberg testify on LIBOR
— zerohedge (@zerohedge) July 10, 2019
Congressman David “Libra/Libor” Scott apparently has a Wharton MBA according to Wikipedia
— G.H. Burns, CFA (@GHBurnsCFA) July 10, 2019
I try to hold out hope that some reasonable #crypto regulations can be devised in the U.S. to minimize fraud/harm to small investors and maximize innovation at the same time. I try. I really do.
Then stuff like this happens…https://t.co/3iZ9IIJI1B
— Peter A. McKay (@peteramckay) July 10, 2019
Calling Libra LIBOR to own the libs
— George Pearkes (@pearkes) July 10, 2019
“Why do they keep talking about LIBRA and when did it become LIBOR?’ pic.twitter.com/y7JOMFEVJ2
— NOD (@NOD008) July 10, 2019
If you can call Libor Libra how can you twist SOFR?
— Michael S. Derby (@michaelsderby) July 10, 2019
— Pranil Vitha (@pvitha) July 10, 2019
Libra vs libor. That’s whole new chapter in finance.
— StB.3624 (@SamTwum) July 10, 2019
LIBRA? Really? Not LIBOR? And this clownface manages to sit in the US House? #Godyourestupid
— Tickerguy (@tickerguy) July 10, 2019
I’m a Libra or is it a Libor?
— Brennan Huff (@herz1) July 10, 2019
You say Libra, I say LIBOR, you say tomato, I say tamahto https://t.co/vDBzrHA4f2
— Ben White (@morningmoneyben) July 10, 2019
LIBRA LIBOR whatever…. These people make decisions on behalf of the country…. We’re screwed
— Allbullnobear (@allbullnobear8) July 10, 2019
Watching the Powell testimony and the politician questioning him just confused LIBRA (Facebook crypto) with LIBOR (London Inter-Bank Offered Rate). I think that about sums up the state of our government’s comprehension abilities. pic.twitter.com/XnWFsTXksG
— afvarner (@afvarner) July 10, 2019
My new mortgage is 25bp over LIBRA.
— Carl Quintanilla (@carlquintanilla) July 10, 2019
Covered so far in hearing, about an hour into it: Libra, Libor, Labor.
— Katia Dmitrieva (@katiadmi) July 10, 2019
And so on.
Once again, this is a member of the House Financial Services Committee – one of the supposedly “smart” ones – and he is also a Wharton grad. And yes, these are the people crafting the financial legislation for over 300 million Americans.
Watch the full exchange 54 minutes into the hearing.