WASHINGTON—Both NAFCU and CUNA are asking the Federal Reserve for consistent and transparent guidelines as the Fed creates new rules for access to Reserve Bank accounts and services.
In its letter to the Fed, NAFCU Senior Counsel for Research and Policy Andrew Morris underscored the importance of the Federal Reserve adopting a uniform and transparent framework for evaluating request for access to the Federal Reserve payment system. Morris also urged the Federal Reserve to ensure that non-federally insured institutions meet the same safety and soundness standards applicable to insured institutions.
Morris further suggested the Federal Reserve should exercise heightened due diligence when evaluating requests from non-depository institutions engaged in novel financial activities.
In addition, Morris urged against promoting standards that would be more burdensome than what currently exist for credit unions seeking access to Fed services today. Morris stated the guidelines should not entail a more onerous standard for monitoring credit unions that currently have account and service access.
CUNA’s Comment
Meanwhile, in its letter to the Fed, CUNA stated the trade association “supports the board’s effort to establish clear and consistent guidelines to evaluate requests for master account access to Reserve Bank accounts and services. The proposed Guidelines do not address how the Reserve Banks would ensure that new applicants for Reserve Bank accounts and services that are not subject to the rigorous regulations and supervision in place for federally-insured depository institutions or privately-insured state-chartered credit unions would demonstrate adequate standards ensuring the safe operation of the payments system.”
CUNA added that while the current system has worked well, providers other than credit unions and banks will likely seek access, and some could rely on technologies that may pose “unique risks” to the payments system.
Other Recommendations
The letter also recommends:
- The Federal Reserve Board and Reserve Banks should create a uniform evaluation policy and procedures so that the guidelines are deployed consistently across the Reserve Banks when approving an entity to have master account access at a Reserve Bank
- The guidelines should not impose additional requirements on credit unions or create additional burdens, considering the strict and numerous regulations already in place for their safe and sound operation
- Working through the robust information already provided by credit unions will ensure the process for application and ensuring ongoing compliance with the guidelines is efficient and seamless
- The framework should create uniform risk management standards that would help ensure every entity that requests access to Reserve Bank accounts meets minimum standards
- The Federal Reserve should develop a process to monitor entities granted Reserve Bank access on an ongoing basis
- The board should develop a floor for capital, liquidity, and risk management requirements for master account access that meets prudential standards in place for federally insured or supervised financial institutions