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13 U.S.F. L. Rev. 431 (1978-1979)
The Federal Government's Operational Role of EFT

handle is hein.journals/usflr13 and id is 441 raw text is: The Federal Government's
Operational Role in EFT
By THERESA A. EINHORN
Attorney, Zimmer, Egge & Sisk, Washing-
ton, D.C.; B.A., University of Delaware,
1973; M.A., University of Wisconsin, 1974;
J.D., Georgetown University, 1977. Mem-
ber, District of Columbia Bar.
Introduction
THE DEVELOPMENT OF electronic fund transfer (EFT) ser-
vices has raised new questions as to the appropriate role of the
federal government in the nation's payments mechanism. The cur-
rent controversy centers on the Federal Reserve System's opera-
tional involvement in EFT systems. Although the Federal Reserve,
since its creation in 1913, has been operationally involved in the
payments mechanism,' the movement away from a paper-based
system has highlighted the need to re-examine the proper scope of
the government's role as a direct provider of services.
The Federal Reserve has gone well beyond its traditional in-
volvement in the check collection system, and has expanded the
scope of its operations to providing clearing and settlement services
to privately owned automated clearinghouse (ACH) associations.
The Federal Reserve's expansion into EFT, however, is not explic-
itly authorized by statute, and the Federal Reserve's dual role as
regulator and operator in the emerging payments system presents
potential conflicts of interest.3 Moreover, the Federal Reserve's op-
eration of ACH facilities, which involve collection, storage, and ac-
cess to detailed information regarding an individual's financial
transactions, widens not only the scope of information available to
the government, but also the ease with which it can be obtained.'
Finally, the most significant consequence of the federal govern-
1. See text accompanying notes 13-14 infra.
2. See text accompanying notes 20-25 infra.
3. See, e.g., Hearing in the Matter of Proposed Amendment of Regulation JBefore Board
of Governors of the Federal Reserve System 5-7 (Apr. 2, 1976) (comments of the Office of
Telecommunications Policy); PRIVACY PROTECTION STUDY COMM'N, PERSONAL PRIVACY IN AN
INFORMATION SocIErY 123 (1977) [hereinafter'cited as PPSC REPORT].
4. See, e.g., PPSC REPORT, supra note 3, at 122-23.

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