More than two dozen financial institutions are seeking access to the Federal Reserve's payments system, most of which are located in Wyoming, Puerto Rico or California, according to a newly released
On Friday, the Fed launched its
The rollout ends a tumultuous chapter between the Fed and Congress, during which the two sides grappled over transparency requirements around master accounts.
"This is a great first step," Julie Hill, a law professor at the University of Alabama and a leading scholar on payment systems, said. "And I hope it is a first step. I hope it will show the Federal Reserve that transparency can be good for them and change how they think about providing information about accounts and payments in the future."
For decades, master account access was largely overlooked. Regulated banks were, for the most part, the only groups that sought such accounts and most were able to obtain them with relative ease. The database shows an uptick in interest from novel charters that specialize in digital assets or other tech-based business models.
The issue rose to public attention last year during the Senate Banking Committee's review of Sarah Bloom-Raskin, the Biden administration's pick for Fed vice chair for supervision. During Bloom-Raskin's confirmation hearing, Sen. Cynthia Lummis, R-Wyo., questioned the nominee about her role in helping the financial technology company Reserve Trust obtain a master account through the Federal Reserve Bank of Kansas City.
A former deputy Treasury secretary and Fed Board governor, Bloom-Raskin joined Reserve Trust's board of directors after leaving the federal government. During her tenure, the firm became the first fintech and first state-chartered trust to obtain a master account. Republicans on the Banking Committee
Bloom-Raskin's ultimately
Then-Sen. Pat Toomey, a
The database, which can be found under the payments portion of the Fed's website, allows users to search for institutions by name, location, Federal Reserve district and date of application or decision. Users can also narrow their search by whether an institution is federally insured, which has emerged as a key topic of debate around the subject in recent months.
Hill applauded the Fed for going beyond the baseline requirements of the provision, noting that the central bank elected to include which tier each applicant falls into. Last year, the Fed
Still, she said, she would have liked the Fed to separate direct account holders from groups with correspondent access through an affiliation with an account holding bank. She also would have liked to have seen which tiers existing account holders fall under, but noted that retroactively applying those designations will likely take some time.
"I'm not terribly surprised they didn't include that, because they have not been dividing banks into those tiers for very long," she said.
Hill also noted the large number of account holders without federal deposit insurance. More than 400 current master account holders fall under that category, according to the database. Hill said that fact raises questions about the
A lack of federal deposit insurance was one of several reasons cited by the reserve bank for denying Custodia — a digital asset bank — access to the Fed's payments system.
Custodia is
Custodia CEO Caitlin Long took to Twitter after the database went live. She said the information raises "a lot of questions," especially about account holders that "may not even have been eligible for one."
"No wonder why the Fed fought so hard to keep this list secret for so many years, until Congress forced it to release the list," she tweeted.
