Facebook's new currency plan under scrutiny in Congress

WASHINGTON -- Facebook's ambitious plan to create a financial eco-system based on a digital currency faces questions from lawmakers, as it's shadowed by negative comments from President Donald Trump, his treasury secretary and the head of the Federal Reserve.

Congress began two days of hearings Tuesday on the currency planned by Facebook, to be called Libra, starting with the Senate Banking Committee. Meanwhile, a House Judiciary subcommittee will extend its bipartisan investigation of the market power of Facebook, Google, Amazon and Apple.

Trump tweeted last week the new currency, Libra, "will have little standing or dependability." Both Treasury Secretary Steven Mnuchin and Fed Chair Jerome Powell have expressed serious concerns recently Libra could be used for illicit activity.

The Treasury Department has "very serious concerns that Libra could be misused by money launderers and terrorist financers," Mnuchin told reporters at the White House on Monday. "This is indeed a national security issue."

Facebook has "a lot of work to do before we get to the point where we're comfortable with it," Mnuchin said.

Already under intense scrutiny from regulators and Congress over privacy and market dominance, Facebook stirred anger on Capitol Hill last month with the unveiling of its plan to create a financial ecosystem based on a digital currency. Senate and House hearings went on the calendar, and the Democratic head of the House Financial Services Committee, which is holding today's hearing, called on Facebook to suspend the plan until Congress and regulators could review it.

Rep. Maxine Waters, D-Calif., said Facebook, with some 2 billion users around the world, "is continuing its unchecked expansion and extending its reach into the lives of its users." She called Libra "a new Swiss-based financial system" potentially too big to fail and perhaps requiring a taxpayer bailout.

David Marcus, the Facebook executive leading the project, said in his testimony Libra "is about developing a safe, secure and low-cost way for people to move money efficiently around the world. We believe that Libra can make real progress toward building a more inclusive financial infrastructure."