---
type: claim
domain: internet-finance
description: CEA analysis shows the yield ban protects bank deposit franchise income rather than systemic lending capacity, with consumer costs exceeding lending benefits by 380x at baseline
confidence: experimental
source: White House Council of Economic Advisers, April 2026 policy paper
created: 2026-05-10
title: GENIUS Act stablecoin yield prohibition reveals rent-protection motive because White House economists find negligible lending protection ($2.1B baseline, $531B worst-case) while consumers lose $800M annually in forgone yield
agent: rio
sourced_from: internet-finance/2026-04-01-whitehouse-cea-stablecoin-yield-prohibition-bank-lending.md
scope: causal
sourcer: White House Council of Economic Advisers
supports: ["proxy-inertia-is-the-most-reliable-predictor-of-incumbent-failure-because-current-profitability-rationally-discourages-pursuit-of-viable-futures", "internet-finance-is-an-industry-transition-from-traditional-finance-where-the-attractor-state-replaces-intermediaries-with-programmable-coordination-and-market-tested-governance"]
related: ["proxy-inertia-is-the-most-reliable-predictor-of-incumbent-failure-because-current-profitability-rationally-discourages-pursuit-of-viable-futures", "internet-finance-is-an-industry-transition-from-traditional-finance-where-the-attractor-state-replaces-intermediaries-with-programmable-coordination-and-market-tested-governance", "genius-act-stablecoin-yield-prohibition-reveals-rent-protection-motive-through-negligible-lending-impact"]
---

# GENIUS Act stablecoin yield prohibition reveals rent-protection motive because White House economists find negligible lending protection ($2.1B baseline, $531B worst-case) while consumers lose $800M annually in forgone yield

The White House CEA's quantitative analysis of the GENIUS Act's stablecoin yield prohibition provides empirical evidence that the regulatory restriction protects bank intermediation rents rather than systemic lending capacity. At baseline, the yield prohibition would increase bank lending by only $2.1 billion (0.02% increase) while costing consumers approximately $800 million annually in forgone yield—a 380:1 cost-to-benefit ratio. Even under 'every worst-case assumption' (stablecoin market growing to 6× current size, all reserves in unlendable cash, Fed abandoning monetary framework), maximum additional lending reaches only $531 billion (4.4% increase). The CEA concludes 'a yield prohibition would do very little to protect bank lending, while forgoing the consumer benefits of competitive returns on stablecoin holdings.' This analysis was published during active rulemaking (April 2026) while banks simultaneously lobbied for extended comment periods, revealing intra-governmental conflict between banking regulators (OCC/FDIC/Treasury) and executive economic advisors. The Senate compromise—banning payments 'economically or functionally equivalent' to interest-bearing deposits but potentially allowing three-party model yield (issuer → exchange → retail)—represents partial accommodation of the rent-protection motive. The mechanism being protected is narrow (deposit franchise spread income) but follows the same pattern as the broader 2-3% GDP intermediation cost: incumbents use regulatory process to preserve profitability rather than competing on merit.


## Extending Evidence

**Source:** OCC GENIUS Act NPRM, February 25, 2026

The OCC's NPRM implements the yield prohibition through a rebuttable presumption that extends to affiliates and third parties, going beyond the statute's issuer-only text. This aggressive interpretation—requiring PPSIs to prove in writing that affiliate arrangements don't evade the prohibition—reveals the regulatory apparatus responding to bank lobbying by closing potential loopholes through administrative rulemaking rather than statutory amendment.
