Thomas,

First, it's nice to know that you're interested in my views the subject. Before (https://news.ycombinator.com/item?id=3595814), you did not seem to be.

You have summarized my position incorrectly. Generally, there are two major distinct requirements that the MTA sets forth: tangible net worth and surety bonds. These requirements are independent and cumulative (not mutually exclusive). There are further two types of surety bonds required that in aggregate (and the law explicitly requires aggregation for most startup-type activity) must be valued at $750K minimum. At 3% per year that costs a startup at least $22,500 per year just to operate in one state.

Contrary to your summary, that number is clear. The number that is not clear is the tangible net worth requirement. The current statute sets it at a minimum of $500K, again, independent of the surety bonds. The statute then gives the Commissioner (or his/her subordinates) the power to raise that number to any level on a case-by-case basis, without even informing the applicant. So the bar can change, and you can be told that it HAS changed, but you do not necessarily need to be told what it is. I was told $1M, $2M, $20M, and $80M in one meeting, later to be told $1.5M--maybe. This is a constitutional due process issue if there ever was one. It's also an issue of giving a single bureaucrat unfettered discretionary power--another constitutional problem.

You can apply anyway (for the $5,000 non-refundable application fee), but if you are rejected, you must inform other states that you have been rejected from applying for a license, and there is a highly increased risk that they will in turn reject you in their own state. This cascading effect poses serious constitutional problems.

If you break any part of any state money transmission law without meaning to, and even if you have been advised by a lawyer that you are in the clear, you are in violation of 18 U.S.C. § 1960(a), which means you and your investors could go to jail, because that's what 1960 actually says (http://www.plainsite.org/laws/index.html?id=14426). And it has been used against people, mostly Muslims (http://www.plainsite.org/laws/index.html?id=14426&table=...).

Furthermore, as I see you pointed out, the aggregate burden of complying with 47 state laws far outweighs any nominal (and I would argue illusory) consumer protection benefit--another constitutional problem under the Pike test.

So what would I like to see go away? All of this. In its place I'd like a single federal regulator like Canada's FINTRAC that charges no fees, registers companies in the space, and performs real-time checks on operational funds used to keep these companies running. Current bank regulators barely use computers for actual regulation, which is why MF Global and Peregrine were able to fail even though they were capitalized in the eight and nine figures (see http://www.aarongreenspan.com/writing/essay.html?id=77).

Your argument that the "answer to it" is to make requirements even higher does not scale or in my opinion even make any sense. Those examples at least prove it wrong. By your logic there should only be three mega-companies with trillions of dollars that can comply with these amazingly high requirements. We have that now. It's not working very well. Most people call it "too big to fail" and see it as a problem.

A better solution is FDIC-type insurance for money transmitters. Companies pay premiums based on risk to insure each other, instead of buying limited surety bonds to insure only themselves.

Lastly, Ezra Levine has to do with it because he wrote the MTA. He also wrote Hawaii's law. He also wrote about twenty other laws. http://www.moneylaunderingconference.com/2012/speakers.asp ("He is the author of money transmitter licensing laws in many states and has been instrumental in the passage of model money transmitter safety and soundness laws in numerous states.") From the GCMT 2006 conference web site which is no longer on-line: "Since 1986, Mr. Levine has represented a wide variety of check issuers, funds transmitters, stored value issuers, bill payment entities and internet funds transmitters with regard to all aspect of the approximately 45 state statutes dealing with licensing of payment instrument issuers, funds transmitters and the like." And, "He has had an active role in the enactment of the money transmitter laws in Oregon, Minnesota, Washington, Iowa, West Virginia, Illinois, Wyoming, North Carolina, Florida, Idaho, North Dakota, New Jersey, Tennessee, Maine, Vermont, Arizona, the District of Columbia and Indiana."

So yes, we do think that Western Union has been trying to prevent the creation of new innovative services since before most states even had commercial dialup Internet access.

Aaron