Fed's payment access deadline passes without public answer
The Federal Reserve missed a White House deadline to report on expanding direct access to its payment systems for nonbanks and uninsured depositories.
In brief
The Federal Reserve missed a White House deadline to report on expanding direct access to its payment systems for nonbanks and uninsured depositories. The Fed says Congress would need to change the law to expand who can access Reserve Bank accounts, but a separate proposal could let eligible institutions connect…
White House asks Fed about payment access
A May 19 executive order directed the Federal Reserve to study whether uninsured depositories and nonbank financial companies should get direct access to Reserve Bank payment services.
Fed had 120 days to deliver findings
The executive order gave the Federal Reserve until September 16 to submit findings, options and recommendations on payment access to the White House economic adviser.
Deadline passed, no public report yet
As of Thursday, it was unclear whether the Fed submitted its report. The executive order does not require publication, so the absence of a public report does not confirm whether the deadline was met.
Why direct access matters for payments
Direct access to the Federal Reserve removes an intermediary from the chain between a transaction and settlement, potentially lowering costs and speeding up payments for fintech firms.
Current law limits who can qualify
Reserve Banks can provide accounts to member banks, depository institutions, and foreign bank branches. Uninsured depositories can qualify if eligible for federal deposit insurance, but nonbanks generally cannot.
Fed says Congress must change the law
Federal Reserve Governor Christopher Waller wrote that the Fed lacks authority to expand legal eligibility for Reserve Bank accounts and that doing so would require legislative action by Congress.
“The Federal Reserve does not have the authority to expand legal eligibility for access to accounts and services.”
Separate proposal creates special accounts
The Fed's OP-1878 Payment Account proposal would let legally eligible institutions access Fedwire, FedNow and settlement services without using intermediaries, but excludes FedACH and intraday credit.
Banks worry about losing customers
Wood and Huston Bank warned that Payment Accounts could shift payment flows and customer relationships away from community and regional banks to less-regulated fintech firms.
Fintechs want full access to ACH
The Financial Technology Association argued that excluding FedACH from Payment Accounts would force holders to rely on intermediaries for ACH payments, defeating the purpose of direct access.
Two separate questions remain open
The OP-1878 proposal addresses what access eligible institutions should receive. The White House review asks the broader question: should Congress change the law to expand eligibility itself.
What to remember
The Fed says Congress would need to change the law to expand who can access Reserve Bank accounts, but a separate proposal could let eligible institutions connect directly without intermediaries.
