Fed weighs publication list of primary account holders and applicants

The Federal Reserve is considering whether to release a list of institutions that have accounts at its 12 regional reserve banks.

The Fed’s Board of Governors announced Friday that it is seeking public comment on a proposal to require Reserve Banks to submit a quarterly report on depositories in their district that have obtained so-called primary accounts, which provide access various Fed payment services. .

Information about primary account holders would then be compiled into a single list published on the Federal Reserve System’s website, according to a notice filed Friday with the Federal Register.

The Federal Reserve said Friday it plans to release a list of banks that have primary accounts and those that have applied for primary accounts.

Bloomberg News

The Fed also plans to publish the names of the groups that submitted applications for primary accounts, the dates they applied, and the status of their applications.

“Today’s proposal will improve transparency to the public by periodically publishing a comprehensive list of financial institutions that have access to Federal Reserve accounts and payment services,” said the vice president of the Fed, Lael Brainard, in a press release. “I look forward to hearing feedback on this proposal for increased transparency.”

Historically, the Fed has made little public access to information related to the master account, as it has considered this to be confidential business information.

In a statement on Friday afternoon, the Fed said the decision to consider a more public approach to key account management stemmed from comments received during the rulemaking process for his new framework for granting master accountswhich was finalized in August.

The Fed is also under pressure from members of Congress to clarify the process for granting the main account.

For months, Sen. Pat Toomey, R-Pa., the senior member of the Senate Banking Committee, has been urging the Federal Reserve Bank of Kansas City to provide information on its management of the Reserve Trust Master Account, which became the first fintech to secure an account with a Reserve Bank. The Denver-based trust later his account was revoked.

The problem first appeared during the Sarah Bloom Raskin confirmation hearing, a former Fed governor who was the Biden administration’s first choice to be the Fed’s vice chairman for oversight. Raskin served on the board of Reserve Trust when the company got a lead account, raising questions about what role she might have played in securing Fed approval. Raskin finally withdrawn from review in the face of refusal by Sen. Joe Manchin, DW.Va., and Republicans on the Banking Committee.

The Fed’s main account granting process has also been questioned in a complaint filed by Custodia Bank. The Wyoming-based digital asset bank is trying to coerce the Fed into making a decision on its two-year-old primary account application.

In its application, Custodia argues that as a state-chartered depository institution it is entitled to an account or at least a prompt response to the application, as required by the Administrative Procedure Act.

The Fed has refuted these claims, arguing that Custodia’s business model presents new risks to the federal banking system that need to be assessed in due course. He also argues that Reserve Banks, which have discretion over the institutions to which accounts are granted, are not subject to APA.

After a Federal Court judge refused to grant Fed motion to dismiss this suit it’s about to go to trial.

In its proposal to make key account information publicly available, the Fed asked the public to answer several questions, including how often the list should be published and what steps should be taken to ensure that confidential information is not leaked. not disclosed.

The public has 60 days to respond to the request.

About Florence M. Sorensen

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