AFP Reacts to Obama's Payments Proposal
The Association for Financial Professionals (AFP) has greeted President Obama’s plan to strengthen oversight of payment, clearing and settlement systems with caution. Ernie Humphrey, AFP’s director of treasury services, said that the plan needs to ensure the continued competitive balance of the payments, clearing and settlement industry while accounting for risk. “We need to ensure that regulation does not introduce inefficiencies in these systems, significantly increased costs for corporations, or create a disincentive for innovation in the arena of payments,” he added.
Another concern for AFP is customer privacy. Obama’s plan said the Federal Reserve “should have authority to collect information from any payment, clearing, or settlement system for the purpose of assessing whether the system is systemically important.” Humphrey wonders how far the Fed will go. “The concern would be if the Fed had the ability to go in and extract important information that was customer-specific and possibly disclose business practices that create competitive advantage,” he said.
Humphrey is pleased that the plan calls for giving the Fed supplementary authority, rather than replacing the existing regulatory authority altogether. “The key to all this is the scope and depth of the proposed regulation,” Humphrey said. “The details of the plan are key.”