On Nov. 13, the General Accounting Office (GAO) published a report titled, "Federal Reserve System: Policies in Place to Manage Potential Conflicts of Interest." This report responds to a mandate in the Gramm-Leach-Bliley Act that the GAO study the potential conflicts of interest faced by the Fed in its role as central bank, payment services provider and regulator of the banking system.
The GAO focused its review on the Fed's retail payments services—including check collection and ACH services. Members of the GAO staff interviewed Fed staff, private-sector competitors, and customers to identify:
In its final report, the GAO found "no evidence to suggest that the Federal Reserve has not adequately separated its multiple roles." It concluded that while the potential for conflicts exists, the Fed has policies in place to prevent Reserve Banks from using internal information to gain a competitive advantage. The GAO did recommend that the Fed modify the process for reviewing its pricing methodology and clarify its policies for introducing new products.