Custodia Bank Loses Bid for Federal Reserve Master Account

by Giorgi Kostiuk

3 years ago

Made with AI

The Custodia Bank sued the Central Bank in 2022 because of a delayed decision on their master account application. A judge ruled that the Federal Reserve is not required to provide the bank with access to its master account. Judge Scott Skavdahl stated that Federal Reserve Banks can grant master accounts, but Custodia did not receive approval for theirs. The bank argued that every depository institution under state law should be entitled to a master account, but the court dismissed the claim. Custodia accused the Fed of violating the Administrative Procedures Act, but the court rejected this claim as well. Custodia's application for a master account was filed with the Kansas City Fed in 2020 and was denied in January 2023. The bank is governed by Wyoming law as a special purpose depository institution.

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