Custodia seeks judge to reverse Fed's decision to deny master account application

Custodia Bank has just submitted a court defense to the Tenth Circuit Court of Appeals, questioning a Wyoming judge's decision to grant the Federal Reserve unrestricted power to refuse its main account. Custodia requested that the appeals court instruct the Wyoming district court to revoke its refusal of Custodia's main account and give it one. Custodia CEO Caitlin Long hired a pair of senior Supreme Court lawyers to defend her company. Here are some of their arguments:

1. Custodia's lawyers claim that the Federal Reserve's power to refuse to provide a main account to state-chartered banks undermines the dual banking system, which allows banks to choose to operate under state or federal charters.

2. They also argue that the Federal Reserve's power to discriminate against state-chartered banks seeking main accounts may violate the Monetary Control Act, which allows state-chartered banks seeking Federal Reserve services to receive fair treatment.

3. They emphasize that Congress used the word "shall" in the Monetary Control Act, which states that "all Federal Reserve bank services...shall be available to nonmember depository institutions," to show that Congress intended all eligible banks to have equal access to Federal Reserve services.