Banking Associations Raise ‘Significant Concerns’ with Proposed Changes to Fed Master Account Guidelines

Washington, D.C. — A coalition of banking associations responded today to the Board of Governors of the Federal Reserve as it seeks to establish guidelines for how institutions applying for a Fed master account will be evaluated. The response raises significant concerns with the proposal, arguing that the Federal Reserve has thus far failed to resolve fundamental issues on how these revised guidelines will address the unique risks to the U.S. payments and financial systems posed by institutions with novel charters.

“The Federal Reserve’s proposed guidelines for considering master account applications fail to answer who is legally eligible to apply, how applications will be reviewed, how compliance will be monitored and what measures are in place to ensure guidelines are enforced consistently among Reserve Banks,” stated the organizations. “Answers to these questions remain paramount to achieve consistent outcomes at the Reserve Banks and equitable access for the institutions they serve.”

The current proposal is a supplement to a May 2021 proposal issued by the Federal Reserve and would establish a three-tiered approach of increasing stringency for evaluating applications for master accounts. Tier 1 represents federally insured institutions; Tier 2 represents uninsured institutions subject to federal supervision at the institution and, if relevant, the holding company level (either statutorily or contractually); and Tier 3 represents all other uninsured institutions, including institutions with novel charters — those that are neither FDIC-insured nor subject to oversight by a federal banking regulator — that have become increasingly available in recent years. Under the proposal, Tier 3 institutions would be subject to the highest level of scrutiny.

In addition to highlighting the proposal’s omissions of key details surrounding legal eligibility and how applicants will be reviewed and held accountable if granted access, the organizations recommended two principles that should guide the Federal Reserve’s approach to master account applications:

  1. The Federal Reserve Board should approve, or — at a minimum — be provided with notice of, and opportunity to object to, an application by a Tier 2 or Tier 3 applicant to ensure consistent outcomes of decisions made across the Federal Reserve’s 12 different Reserve Banks.
  2. Approved institutions should be held to the same supervision and oversight expectations, regardless of the charter type or business model, to preserve the safety and soundness of the financial system and compliance with existing laws and regulations.

The American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Independent Community Bankers of America, Mid-Size Bank Coalition of America and The Clearing House Association all joined the letter.

To access a copy of the letter, please click here.


About the American Bankers Association

The American Bankers Association is the voice of the nation’s $23.7 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $19.7 trillion in deposits and extend $11.2 trillion in loans.

About Bank Policy Institute

The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.

About the Consumer Bankers Association

The Consumer Bankers Association represents America’s leading retail banks. We promote policies to create a stronger industry and economy. Established in 1919, CBA’s corporate member institutions account for 1.7 million jobs in America, extend roughly $4 trillion in consumer loans and provide $275 billion in small business loans annually. Follow us on Twitter @consumerbankers.

About Independent Community Bankers of America

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. With more than 50,000 locations nationwide, community banks constitute 99 percent of all banks, employ nearly 750,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding more than $5 trillion in assets, nearly $4 trillion in deposits, and more than $3.4 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at

About the Mid-Size Bank Coalition of America

Across the country mid-size banks are providing financial solutions to entrepreneurs, professionals, their businesses and their families.  Mid-size banks fuel their growth and build stronger connections to the communities in which they operate. The MBCA is proud to be their voice and their self-help network.

About The Clearing House Association

The Clearing House Association is a nonpartisan advocacy organization that represents the interests of its member banks and the broader banking industry by developing and promoting policies to support a safe, sound, and competitive banking system that serves customers, communities, and economic growth. Learn more at

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