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We have to confess that we didn’t shred Facebook’s Libra concept when it first hit the airwaves because it seemed too silly to merit giving it that much attention.

So Facebook, whose experience in finance consists of managing its own cash flows, cobbled together a document it managed to lard up with pretty much every hot buzz phrase from money-land. Libra would allow users to seamlessly and cheaply remit money…but using what amounted to a currency ETF based on a basket. So users would incur FX risk and probably fees in converting to the real world currencies to pay bills, along with taxes reporting and even taxes, since the US regards cryptocurrencies as property and subject to capital gains taxes.

Our belief was that Facebook announced Libra to imply that it had whole new business worlds to conquer, so as not to worry about the serious questions raised about its ad business, as well as to distract attention from the hot water the company was in.

Facebook had also entertainingly said it was going to domicile Libra in Switzerland. The Swiss banking regulators cleared their throats and said Facebook had said nothing to them about this idea.

Facebook nevertheless had gotten 27 Companies You Heard Of to sign up as partners, although upon inspection, that only meant a teeny bit more than Facebook trying to suggest it had the Swiss in its corner. The non-binding agreement amounted to: “We’ll give you $10 million if you get anywhere with this.” For companies like JP Morgan, Visa and Mastercard, $10 million is couch lint.

And even if these had all been hard dollar commitments, they still would not have amounted to much. Automakers invest in venture capital companies, not because they have Silicon Valley envy, but because they want an early look-see at auto-related tech. These companies in many if not most cases wanted to keep tabs on what Facebook was doing, and their intent could well have been to see if there were opportunities to launch new improved variants on the theme rather than stay with Facebook.

However, it soon became clear that if Libra were to get off the ground, its natural market would be money launderers and speculators.

Central bankers quickly cleared their throats to say Libra was not on. That has now led to Libra’s fair weather partner friends to try to disassociate themselves from the idea. From the Wall Street Journal:

Visa Inc., Mastercard Inc. and other financial partners that signed on to help build and maintain the Libra payments network are reconsidering their involvement following a backlash from U.S. and European government officials, according to people familiar with the matter. Wary of attracting regulatory scrutiny, executives of some of Libra’s backers have declined Facebook’s requests to publicly support the project, the people said. Their reluctance has Facebook scrambling to keep Libra on track. Policy executives from Libra’s more than two dozen backers—a group called the Libra Association—have been summoned to a meeting in Washington, D.C., on Thursday, according to people familiar with the matter.

“Summoned”? I expect that to go over well. Facebook has no legal or business leverage over any of these companies. They are independent actors who don’t need Facebook. Facebook also plans to have a meeting in Geneva to present a charter and appoint a board for the “Libra Association”. This sounds heavy on optics and light on substance. Any meaningful relationship with any of the so-called association members will come about via contract with particular parties based on specific capabilities and services provided.

Facebook is still trying to promote the fantasy that Libra would be used in commerce:

Major defections could imperil Libra, Facebook’s attempt to persuade consumers to swap their national currencies for a digital coin that could be used to pay for goods and services on the internet. Without a network of financial partners that could help transfer currencies into Libra and global retailers to accept it as a form of payment, Libra’s reach would be limited.

Again, who wants and needs to buying things in a foreign currency and swapping in and out of their national currency? Who wants the volatility? Worse, merchants showing prices in Libra would presumably also need to show prices in local currency terms. It would be an enormous hassle for them to manage the pricing and avoid taking losses against their home currency in which they presumably paid their rent and employees, and most if not all of their inventory.

The Journal depicts central bankers wanting financial services incumbents to obey the law somehow nefarious because it exposes the half-assedness and arrogance of Facebook acting as if launching a currency is as serious as putting on a high school production:

Privately, U.S. regulators have leaned on Libra’s backers. The Treasury Department sent letters to companies including Visa, Mastercard, PayPal Holdings Inc. PYPL -1.02% and Stripe Inc. asking for a complete overview of their money-laundering compliance programs and how Libra will fit into them…. Libra Association members, meanwhile, have been pressing Facebook for more information. They have asked Mr. Marcus and other Facebook executives how illegal activities such as money laundering and terrorist financing would be kept off Libra and haven’t received detailed answers, one of the people said.

The Facebook retort was so lame as to validate the “partners” claims:

Mr. Marcus said on Twitter on Tuesday evening that it was “categorically untrue” that detailed information about how to protect the Libra network from illegal activity wasn’t shared. “I can tell you that we’re very calmly, and confidently working through the legitimate concerns that Libra has raised by bringing conversations about the value of digital currencies to the forefront,” Mr. Marcus said.

Help me. “Conversations about the value of digital currencies” is Silicon Valley sales patter, the opposite of engaging in nitty-gritty discussions of how to devise controls to prevent criminal activity. This proves that Facebook is either high on its PR or hopelessly out of its depth.

The article finishes with the finance types pulling the choke chain:

“It’s important to understand the facts here and not any of us get out ahead of ourselves,” Visa Chief Executive Al Kelly said on the company’s earnings conference call in July. “No one has yet officially joined.”

As Lambert would say, pass the popcorn.