Two House Democrats introduced a bill Thursday requiring the Federal Reserve Board to separately price each service it offers banks.
The legislation also would prevent the central bank from offering a bundle of services at a discount. For example, instead of charging a flat rate for check clearing, the Fed would have to charge for sorting, routing, and settling checks.
Reps. Henry B. Gonzalez of Texas and Carolyn B. Maloney of New York said their bill would force the Fed to stop subsidizing check clearing and other services. Taxpayers would benefit because the Fed would return more of its operating revenue to the Treasury Department.
"The Federal Reserve Free Enterprise Act will put an end to this corporate welfare by letting private-sector businesses fully compete with the Fed to provide a whole host of services to your nation's banks," Rep. Maloney said.
Fed officials declined to comment, but the Independent Bankers Association of America opposed the plan, saying it would increase the prices paid for Fed services. "This is unsound public policy," said Viveca Y. Ware, director of payment systems at the IBAA . "The only ones who will benefit will be a few Fed competitors, namely the nation's largest banks."
The legislation covers 15 services, including electronic fund transfers, electronic cash letters, securities safekeeping, check image capturing, image archiving, electronic check presentment, transportation of paper checks, and bad-check returns.