"Can We Trust Facebook To Run a Bank?" is the headline the New York Times put over an article aggregating opinion on the topic. The Times article concludes, somewhat admirably, by asking: "Do you have a point of view we missed?" and inviting readers who do to write in.
I think the answer in my case is "yes," which is to observe that the most important word in the Times headline question isn't "Facebook" or "Bank" but "we." It carries an embedded assumption that giving a company permission to operate a bank is a collective decision, rather than an individual one. The individual decision is contained in a differently phrased question, "If Facebook chooses to try to start a bank, should I become a customer of it?"
The "we" is a consequence that flows from certain public policy decisions, including, importantly, the decision to provide federal deposit insurance, with the result that it doesn't make much difference to most customers whether their bank is trustworthy. Thus banks, rather than competing on the basis of trustworthiness, compete on the basis of other things, such as how slick their mobile app is or how convenient their ATM locations are. Another way to phrase the question might be, "If a customer chooses to bank with Facebook and it doesn't turn out right, do we the taxpayers or the competing banks who pay into the insurance risk pool want to pay to bail that customer out, or make the customer whole up to the deposit limit?"
So far as I can tell, Facebook isn't even asking for federal deposit insurance or for permission to open a "bank," but rather wants to start a cryptocurrency, which is a way of storing value but differs in some important ways from the other businesses that are called banks.
