00:00Our next guest Rebecca Romero Rainey of the Independent Community Bankers of America has a very different take. She says
00:05the Clarity Act is being fast-tracked through Congress to the benefit of high spending crypto lobbyists rather than serve
00:11public demand or protect Main Street financial stability.
00:15ICBA President and CEO Rebecca Romero Rainey joins us now. Rebecca, thank you so much for speaking with us. You
00:21heard what Ryan of Coinbase just said. What's your response to the crypto industry's perspective on Clarity Act being much
00:30closer than where we've been so far?
00:33Well, I still think there's a lot of unresolved issues. And I think at the end of the day, when
00:38we are talking about what serves the American public the best, I would say it's community banks and the fact
00:45that we are aggregators of local deposits that make over 60% of small business loans and 80% of
00:50the agricultural loans.
00:51We're concerned that the legislation as it stands would lead to tremendous deposit flight out of communities into the hands
00:59of crypto industries and not back into small businesses, consumers.
01:04And we're asking why. There's still a lot to be resolved. Well, then, how would you, if you were able
01:10to actually write this bill with language that would be approved by the community bankers of America,
01:16how would you solve for the idea of deposit flight or the concern of deposit flight? What's the solution there?
01:24So we've actually delivered to the Senate a series of what we're calling some language fixes. I mean, there's there's
01:30loopholes that is as you go down one by one.
01:34Basically, what we're saying at the end of the day is if we're creating an infrastructure for payment stable coins,
01:40let's limit to that.
01:41If we are trying to create an alternative to deposit accounts, the language and the rules should reflect that. And
01:50so as as it relates to the specific fix, let's let's ensure that
01:56that we're not leading to deposit flight and in creating alternative through the payment or allowing the payment of interest
02:02in yield on what may be aggregated balances in stable coins.
02:08Rebecca, I'm curious as to how united the banking industry from small players like community banks to big players in
02:15opposing yield bearing stable coins.
02:18Community banks argued that these yield bearing stable coins would drain the deposits that main street that fund main street
02:24lending. The big banks talk a lot about regulatory arbitrage and shadow banking.
02:28So to what extent are these actually the same concerns or are community banks fighting for their funding model while
02:35the biggest banks are fighting for competitive parity?
02:40Well, I think there's there's a little bit of of all of that going on. And certainly, you know, as
02:46as we start, I think the industry as a whole is saying if if we're going to be doing the
02:50business of banking,
02:51let's apply the the rules and the regulations of banking at the end of the day for community banks, what
02:57we're saying and studies have have shown that if if in fact the payment of interest in yield is allowed,
03:04it can lead up to one point three trillion dollars in deposits leaving the community banking system and a loss
03:10of eight hundred and fifty billion dollars in credit.
03:13And that's what I think the American public really need to focus in on. Who's going to fund these small
03:19businesses, the ranchers, the farmers, as these deposits leave the local community.
03:24So there's there's many impacts here that we really need to take into account.
03:28Some might say this is the free market at work, though, and I know there's like legislation around this happening.
03:34But but what would you say to somebody who says, OK,
03:36wait a second, community banks are paying, you know, one tenth of one percent on checking accounts. Stable coins offer
03:41four to five percent when it comes to yield.
03:44A small business owner in a rural community might look at that and say, well, they're failing to pay me
03:49a yield that I actually see as a good for a good place to park my money.
03:54Why should Congress protect a business model that that underpays its depositors?
04:00Well, so as a third generation community banker myself, what I would say is that community banks welcome competition and
04:07depositors, consumers, small businesses have choices today.
04:11They're making a conscious choice to deposit in local community institutions to redeploy their funds, their capital back into growth
04:20of their local economies.
04:21There is so much that local communities benefit from the presence and the strong engagement of a strong local bank.
04:29And again, it's about choice. But if we're going to do the business of banking, let's apply the same rules
04:34of the road and let's ensure that those consumers are taken care of,
04:38that we have the same safeguards and a resilient system that is there for those consumers, not just in the
04:44good times, but in the challenging times as well.
04:48Rebecca, you asked the OCC to pull Coinbase's National Trust Charter, and your organization launched a six-figure ad campaign
04:54against the Clarity Act.
04:56You told The Hill in an op-ed that the core question is really why are we rushing this?
05:01But we know that this bill has been around, kicking around for about four years now since 2022.
05:07So are you going for let's slow this down or are you going for let's kill it completely?
05:13Let's get this right is what we're going for. And at the end of the day, the polling would show
05:19that 73% of Americans do not support legitimizing the crypto as mainstream.
05:24So whose interests are we representing? Whose interests are we rushing ahead for?
05:29At the end of the day, let's let's take the time to get this right and ensure the appropriate safeguards
05:35and unintended consequences are dealt with.
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