Federal Reserve Pricing of Its Check Clearing Services

Testimony was given concerning the Federal Reserve System's pricing of check clearing and related services. GAO concluded in a prior report that, in establishing a system for pricing its services, the Federal Reserve System generally made reasonable judgments in exercising the wide discretion given to it by the Monetary Control Act. Since May 1982, the Federal Reserve System has taken three actions which are responsive to the major concerns raised in the GAO report: (1) abandoned what amounted to its open-ended subsidy policy for its automated clearinghouse service and committed itself to progressively recovering costs from commercial users until full cost was recovered by 1985; (2) announced a combination of improved check-clearing services and higher fees for improving the balance of costs and revenues; and (3) announced procedures to reduce or price interterritorial and holdover "float." GAO believes that the discipline of having to recover costs is an appropriate guide for the Federal Reserve System to follow in deciding the nature of future resource commitments to the automated clearinghouse system.