When Jamie Dimon went to Washington to speak with Congress about JP Morgan’s $2 billion trading loss, and whether it posed a threat to taxpayers, who would likely be asked yet again to backstop the banking giant should it get in trouble again, he faced a number of softballs from his pals in Washington. Jim DeMint told Jamie Dimon “We can hardly sit in judgement of your losing $2 billion. We lose twice that every day here in Washington.” Washington does actually lose that much money every day, which is absolutely astonishing. But is Washington a business? Is spending taxpayer dollars on land wars and corn subsidies the same as losing billions on a strange credit derivative product? And isn’t this a bit hypocritical coming from a man whose party advocates lowering tax revenue, whenever possible? None of that really matters, because it’s quite possible that neither Jim DeMint nor Jamie Dimon understand what the hell they’re doing anyway.
Meanwhile in San Francisco, Apple was releasing its new products to a rabid, mouth-breathing tech media scrum. Apple knows what they’re doing, as do many others in the tech world. And that’s the theme for the week: how much do these dazzling innovations matter when nothing else works right? And this week had plenty of financial technology innovations.
A duo of banking lobbyists teamed up to apply for control of the .bank top-level domain, after ICANN opened up top-level to new applicants, and new character strings. They don’t have the contract locked up just yet, because an Indian company, which apparently exists only to apply for top-level domains, also asked for control of .bank. It will help prevent phishing attacks, should the banking lobbyists get ahold of it, but there are so many other threats to your money’s safety that one wonders if this will really help that much.
But soon you might not need to worry about Bulgarians with card skimmers at ATMs. NCR, a leading ATM manufacturer, developed technology that will allow for cardless ATM withdrawals. Using QR codes and smartphones, consumers can withdraw cash without taking their card out of their wallet. Now there’s a use for mobile wallets that makes sense — it helps consumers avoid a real world threat.
And speaking of smartphones, and Apple in particular, the next generation of iPhones might come with an NFC-enabled mobile wallet, according to some commentators — including us. Apple unveiled Passbook, a feature built into iOS 6, its new mobile operating system, which carries mobile versions of rewards cards, tickets, and anything you might carry in your wallet or pocket, except for your ID and credit cards. All Apple needs to do is put an NFC chip in its next iPhone, and they’d have a functioning mobile wallet.
What good news that would be for marketers, who seem to think that coupons are a revolutionary way to drive conversions. Intuit, this week, launched a new product called Mobile Purchase Rewards, which allows financial institutions to offer merchant-funded rewards to its customers, based on their spending history.
TIO, the prepaid provider, introduced a new feature for its underbanked customers: mobile bill pay. More than 6,000 vendors accept bill payments through the app, which sort of puts underbanked consumers ahead of ones who use traditional banking products.
As well as Silicon Valley is doing with money and smartphones and the like, our government just can’t seem to figure things out. For example, we learned this week that cheating tax collectors in Salem, Ore., out of $2 million is as easy as putting ridiculous lies on your TurboTax forms. Just don’t report your $2 million prepaid debit card missing.
The CARD Act, which aimed to protect consumers from bad business practices in the credit card industry has one unintended consequence: it prevents stay-at-home spouses, and especially military wives, from getting a card of their own. Washington is trying to do something about it. I wouldn’t hold my breath.
In other Washington news, a congressman from Staten Island introduced legislation that would amend Dodd-Frank to help Emigrant Savings Bank make more money. A whole bill, for one bank. And you can’t get health insurance! And while the Fed keeps rates low, it’s a great time for American homeowners to refinance. Problem is, it puts money into the hands of big banks at the expense of the little ones. It’s almost as if our entire system of governance were designed to help the owners of corporations, or something!
But not all hope is lost. We can use technology to help one another, too. It came out this week that Experian has developed a new way of determining creditworthiness for the underbanked, by looking at a larger set of data.
We have the tools to make a better world, but do those in power know what to do with them?