On March 13, the U.S. Court of Appeals for the 10th Circuit denied a petition for rehearing en banc in a case challenging the court’s earlier decision upholding the Fed’s authority to deny master account applications to eligible state-chartered banks (previously covered by InfoBytes here). Three judges voted to grant rehearing, while the remaining five non-recused judges on the court voted to deny.

A dissent joined by one other judge argued that the DIDMCA requires the Fed to provide access to services to all eligible nonmember depository institutions, and, because access to services requires a master account, every nonmember is eligible for a master account. The dissent noted that the panel’s decision endorsing “unreviewable discretion” effectively hands the Fed a veto over states’ chartering power. The dissent further warned that the majority’s decision does not align with the notion that, where the statute is ambiguous, it must be interpreted to avoid creating a constitutional problem. By allowing unappointed regional Fed officials with “unreviewable discretion” to deny master accounts, the dissent contended such officials wield significant authority pursuant to the laws of the United States, making them “officers” in the constitutional sense, raising serious constitutional concerns because the appointments process for such officials does not comport with procedures under the Appointments Clause. The dissent also highlighted the case’s importance, citing its consequences for the financial services industry.