Federal Reserve 2014 Payments Symposium Highlights

From Bank Systems Technology

“When comparing the evolution of payments in the United States with ancient Egyptian history, one might conclude the Egyptians were further ahead in the development of their culture than the United States has been in advancing a modern payments system.

In early September, the Federal Reserve announced its decision to proceed with the development of a new payments vision. The exact timeline for the completion of the vision has yet to be determined, but observers anticipate it could take eight to 10 years to complete.

In contrast, the earliest known Egyptian pyramids were constructed between 2630 and 2611 BCE. Considering the tens of thousands of laborers required to manually complete the construction in just 19 years, a 10-year horizon for a new payments vision, using modern technology tools, should produce the eighth wonder of the world!”

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How Regulators Fail Taxpayers: The Story of JP Morgan and the New York Fed

From National Review Online

“A few weeks ago, This American Life aired an hour long story showing how the regulators at the Federal Reserve in New York were cozying up with Goldman Sachs, a member of the too-big-to-fail team that of course the Fed is supposed to oversee. For instance, thanks to some secret recordings, you can hear Fed officials talk about how they suspect a Goldman deal with Santander to be “legal but shady” . . . before shrugging the whole thing off. You can also hear both the regulators and Goldman executives acknowledge that the deal should have required Fed approval and then . . . see to no consequences for Goldman.

While this came as a shock to most people listening to the story, this behavior isn’t new. It’s called regulatory capture, and economists have known about it for over 40 years.’

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Revamping the U.S. Payments System

From Bank Info Security

“Over the next five years, the U.S. payments infrastructure is slated to undergo a major overhaul, with the Federal Reserve leading the charge. Two Fed leaders share insights on the impact on U.S. banking institutions.

“Since 2012, the Federal Reserve's Financial Services branch has been focused on identifying payment system improvements that could enhance the end-user payment experience. Over the last 12 months, the Fed has been reviewing how the role it plays in payments might expand, says Sean Rodriguez, senior vice president of industry relations at the Federal Reserve's financial services branch.

The Fed is now focusing its efforts on creating a plan for a new infrastructure for faster payments, rather than adding to existing networks, such as those that facilitate ACH and PIN debit payments, Rodriguez, who is based out of the Federal Reserve Bank of Chicago, told a group of bankers this week in New York.”

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Somebody Stole 7 Milliseconds From the Federal Reserve

From Mother Jones

“Last Wednesday, the Fed announced that it would not be tapering its bond buying program. This news was released at precisely 2 p.m. in Washington "as measured by the national atomic clock." It takes seven milliseconds for this information to get to Chicago. However, several huge orders that were based on the Fed's decision were placed on Chicago exchanges two to three milliseconds after 2 p.m. How did this happen?”

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Bond investors fear another 1994

Some worry bond yields will surge - just like they did when OJ Simpson dominated the headlines - if the Fed tightens sooner rather than later.

What is the Fed's 'taper?'

Taper is Wall Street's latest buzz word as it looks for signs Fed Chairman Ben Bernanke will slow down his stimulus program.

'Too Big to Fail' a Myth? What a Relief

“What a relief it was to read that the "too big to fail" problem — in which the nation's largest financial institutions benefit from government support because of the risks they pose — does not exist!”

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