Setting the Stage for Bank Failures and Rollout of FedNow? U.S. Government Warns Consumers Not to Keep Money in Venmo, CashApp, and PayPal

The Consumer Financial Protection Bureau (CFPB) published a warning to consumers this past week stating that funds held in popular online payment apps, such as Paypal, Cash App, and Venmo, lack FDIC insurance and should be transferred to "insured banks and credit unions." What is the "Consumer Financial Protection Bureau"? Why are they issuing this warning, which could obviously have a serious negative impact on these payment apps if many consumers take their advice and start withdrawing their funds from them? The "About Us" page on their website, which at the bottom of every page in their footer says: "An official website of the United States government", doesn't give much information about who they are. Whenever a website, especially one that claims to be "An official website of the United States government", does not give much information on their "About Us" page, the next thing to check is: who are the people running this organization? "Rohit Chopra is Director of the Consumer Financial Protection Bureau. The CFPB is a unit of the Federal Reserve System charged with protecting families and honest businesses from illegal practices by financial institutions, and ensuring that markets for consumer financial products and services are fair, transparent, and competitive." Bingo! So the CFPB is a "unit" of the U.S. Federal Reserve Central Banking System. So what can we learn from this warning published on this "official website of the United States government" which is actually a unit of the Federal Reserve Central Banking System? First, it is obvious that they are expecting more bank failures. Secondly, as I reported back in April, the Federal Reserve’s new FedNow “Instant Payments” service is scheduled to launch in July, just a few weeks away now. Could it be that these particular payment apps have not enrolled in FedNow, or that FedNow will introduce their own "payment app" soon that could replace these existing apps?