Fed, Treasury Smoothly Handle Surge in Relief Payments

May 20, 2020

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The Federal Reserve’s Atlanta-based Retail Payments Office (RPO) continues to play a key role in distributing one-time economic impact payments (EIP) for citizens eager for relief from the most severe economic disruption in almost a century. The RPO began receiving these emergency payments from the Treasury in mid-April and continues to work with its partners in the Federal Reserve and beyond to safely and efficiently distribute them to the nation’s banks. The payments go to individuals and families under the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress in late March.

Carrying out the Fed’s fiscal agent responsibilities

The Federal Reserve’s automated clearinghouse service, FedACH, which the RPO manages, processes many types of payments daily including direct deposits, utility bill payments, and federal government outlays such as social security benefits. In the Fed’s role as fiscal agent, the U.S. Treasury relies on the Federal Reserve to route payments to bank accounts.

After passage of the CARES Act, getting relief to Americans as quickly as possible became crucial, said Tony Stallings, vice president of retail payments operations for the RPO. Processing delays would mean delays in people receiving their payments. When Treasury officials contacted RPO leaders to begin coordinating the receipt of EIP payments, the team quickly developed a flexible plan to integrate the estimated volume associated with these payments into their ongoing payment flows.

“Our goal was to get them in and out as fast as possible, and I would say we achieved that goal,” Stallings said.

Uniting diverse partnerships behind one mission

This effort doesn’t happen on its own. Partnerships built over years enabled the electronic EIP payments to get out quickly, and the collaboration starts within the Fed. The RPO works on behalf of the entire Federal Reserve System. Indeed, the RPO team constantly coordinates with its Federal Reserve Financial Services colleagues, including the St. Louis Fed–based Treasury Relations and Support Office group that manages central bank collaboration with the Treasury Department. Coordination with the Chicago Fed–based Customer Relations and Support Office group was equally important to ensure that the Fed’s financial institution customers received the Treasury’s communications regarding the EIP payments.

These Federal Reserve Financial Services teams worked smoothly with colleagues not only at the Treasury, but also at the Clearing House, the nation’s other electronic payments operator alongside FedACH, and Nacha, which creates and administers rules and standards for automated clearinghouse participants to follow.

“Having strong, trusted connections and ongoing dialogue with all of those groups was absolutely critical in responding to an urgent series of payments,” Stallings said. “Things worked really well among all the parties.”

Swinging into action after the CARES Act passed

Planning among the parties began upon passage of the CARES Act. The Fed gathered feedback from the payments industry, which helped influence the decision to distribute EIP payments predominantly using the automated clearinghouse because of its speed and safety. Daily emails and conference calls among the Fed teams, Treasury officials, and the Clearing House ensured the payments would flow to banks smoothly. RPO executives and counterparts at Treasury maintained an open phone line, said Charlie Weems, senior vice president of RPO operations and customer service.

The RPO designed its financial services to be resilient and flexible in unusual circumstances such as stay-at-home orders across most of the country. RPO teams were prepared to support the EIP payments and the ongoing flow of FedACH payments to meet the needs of the Fed’s customers and the nation.

The RPO has applied lessons learned during the Great Recession, natural disasters including numerous hurricanes, and the 2001 terrorist attacks. “We’ve learned we’ve got to be flexible and ready for changes that can come from anything abnormal that affects the ecosystem of payments,” Weems said. “Our folks have really become adept at figuring out how to change processes and adapt to meet our customers’ needs.”

Kris Bradley, communications consultant in the Federal Reserve’s Retail Payments Office, and Charles Davidson, staff writer for Economy Matters

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