Annual Defense Bill Includes Toomey Provision to Require Federal Reserve Transparency on Master Accounts

Pat ToomeyImage via Office of Pat Toomey

WASHINGTON, D.C. — U.S. Senate Banking Committee Ranking Member Pat Toomey (R-PA) released the following statement after his provision requiring the Federal Reserve to provide transparency to the public about master accounts was included yesterday in the National Defense Authorization Act (NDAA).

“Events and information gleaned over the last year have raised significant policy questions about the Fed’s approach to awarding master accounts. Access to the Fed’s payment system is a highly valuable public good, and Congress has a responsibility to taxpayers to ensure regulators give out public goods in a fair and consistent manner.

“This provision will provide the American people with the information about master account applications that they deserve, but which the Fed has refused to provide. The Fed and other regulators need to know that if they won’t be transparent, Congress will hold them accountable.”

Senator Toomey’s provision, which is section 5708 of the NDAA, requires the Federal Reserve to create and maintain a public, online, searchable database of institutions that have access to a master account, as well as entities that have requested access to a master account. The database must be updated quarterly and include the status of any request for access, including whether a request was rejected.

The provision’s inclusion in the NDAA is the result of extensive Banking Committee oversight of the Fed’s approach to master account applications. In response to that oversight, the Federal Reserve announced on November 4, 2022 that it was seeking public comment on a proposal to periodically publish a list of institutions that have access to master accounts. However, the Federal Reserve did not propose disclosing information about institutions whose requests for access to master accounts are pending or have been rejected.

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In response to the Federal Reserve’s November 4th announcement, Senator Toomey stated: “[This] announcement represents a step in the right direction, but more transparency is needed. Taxpayers should know not only which institutions have been granted master accounts, but also which ones have been denied access. Just as the FDIC maintains a public database of application for deposit insurance and the OCC maintains a public database of bank charter applications, the Fed should adopt a public database for master account applications.”

Senator Toomey’s provision in the NDAA will ensure that the public has access to this important information.

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