American banks have long been wary of Amazon and a number of other technology behemoths who desperately want to enter the finance train. If one goes by the latest news, the Federal Reserve has also expressed interest in the matter. This matter has been articulated by Randal Quarles, the Vice Chairman of the Federal Reserve. He said that the Fed, the banking watchdog in the United States, has its own concerns about how the technology companies could offer financial services outside the ambit of regulators. Quarles', however, has not made any official intervention until now.
The scrutiny by the Federal Reserve right now is in its preliminary stages. The organization has clearly taken a more cautious stand compared to a few other Trump administration regulators. Technology giants like Google and Amazon have become a target of blame for the present administration. President Donald Trump himself has blamed Amazon's CEO Jeff Bezos and the company itself for cheating the US Postal Service. The president has repeatedly accused the online retailing behemoth of tax evasion. Matters have come to such a point that Steven Mnuchin, the Secretary of the Treasury, requested the US Justice Department to review the influence that Google and other technology companies wields over the American economy. When questioned about such allegations, the Amazon spokesperson declined to comment.
Traditional banks welcome an interference by the Federal Reserve. This is as they regard the technology companies as upstarts that have the advantage of fewer regulatory constraints. These companies encroach on the lucrative lending business. One convincing evidence of this activity is providing a product similar to checking accounts.
Technology company edge
It does not help that consumers have a more positive view of Amazon and other technology firms compared to banks. The former also enjoy better insights into consumer purchasing habits. According to Amazon, about 100 million of its customers have subscribed to the company's Prime subscription program.
Amazon's financial products have an uncanny similarity to bank checking accounts. This was achieved by the company through its strategic tie-ups with banks. The Federal Reserve is helpless in such matters as it has minimal oversight over non-bank companies. It can only regulate if the bank has a partnership with such companies. Another method to bring such companies into the federal grasp is to include them in the Financial Stability Oversight Council. This is a regulatory group monitoring economic threats to the United States.