Fed Account Access for Nonbanks
On May 5, 2021, the Federal Reserve issued for public comment a set of proposed guidelines intended to govern how Federal Reserve Banks would review and assess account applications by firms with novel charters.
The proposed guidelines are in part a reflection of the ongoing efforts by Big Tech and FinTech firms to engage in banking activities without being subject to bank regulation and supervision. Federal and state authorities have begun creating novel types of charters that permit various forms of lending, deposit-taking and payments activities, while avoiding most federal bank regulation and supervision (notably, the BHC Act). Once armed with novel charters, these firms will seek accounts at Federal Reserve Banks in order to, among other things, gain direct access to the Fed’s payment systems (i.e., without the requirement to partner with a regulated bank).
The key elements of the proposal are outlined here; however, serious policy questions remain unaddressed. BPI developed the following series of posts and analyses in an effort to address some of the complexities and implications that would be introduced by allowing nonbanks Fed accounts access.