The Clearing House is a banking association and payments company owned by the largest commercial banks in the United States. The Clearing House is the parent organization of The Clearing House Payments Company L.L.C., which owns and operates core payments system infrastructure in the United States, including ACH, wire payments, check image clearing, and real-time payments through the RTP network, a modern real-time payment system for the U.S.
Supporting services include The Clearing House Payments Authority (a payments association with over 1,000 financial institution members and corporate subscribers) and ECCHO (an entity develops and maintains rules that govern private sector check image exchange for its members, and also engages in lobbying and education).
Membership
Members of The Clearing House include JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Bank of New York Mellon Corp., Deutsche Bank AG, U.S. Bancorp and Wells Fargo & Co. The Clearing House Payments Company, an organization owned by the same banks, was established in New York in 1853 for the purpose of processing transactions among banks. It has offices in New York, North Carolina, Texas, and Michigan.
Bank of America
Bank of the West
Barclays
The Bank of New York Mellon
Capital One
Citi
Citizens
Comerica
Deutsche Bank
Fifth Third Bank
HSBC
Huntington
JPMorgan Chase
KeyBank
M&T Bank
MUFG Union Bank
PNC
Regions Bank
Santander
TD Bank
Truist
U.S. Bank
Wells Fargo
Lawsuits
In September 2009, the Clearing House joined a lawsuit in support of the Federal Reserve after a federal court in New York ruled against the Fed. Filed by Bloomberg News under the Freedom of Information Act, the lawsuit, Bloomberg L.P. v. Board of Governors of the Federal Reserve System, sought records showing where the Fed had lent $2 trillion of taxpayer funds during the bank bailout of the financial crisis of 2008. The Clearing House has filed an appeal before the United States Supreme Court on October 26, 2010. The case was appealed but ultimately rejected on March 21, 2011. The Federal Reserve was required to release the data within five days to Bloomberg L.P.
The Clearing House was also sued by the State of New York in Andrew Cuomo v. Clearing House Association, LLC to determine whether the U.S. Treasury's Office of the Comptroller of the Currency (OCC) had the authority to preempt a state's right to enforce its own fair lending laws against national banks. A 5–4 decision by the Supreme Court overturned previous lower court decisions that had ruled in favor of the Clearing House and the OCC.
History
The New York Clearing House Association was a clearinghouse bank established in New York City in 1853. Initially, it simplified the chaotic settlement process among the banks of New York City. The New York Clearing House functioned as a quasi-central bank: setting monetary policy, issuing a form of currency, and even storing vaults of gold to back settlements. It later served to stabilize currency fluctuations and bolster the monetary system through recurring times of panic. Since the creation of the Federal Reserve System in 1913, it has used technology to meet the demands of an increasingly complex banking system.
Before 1853
In the decade before the Clearing House was founded, banking had become increasingly complex. From 1849 to 1853 –years highlighted by the California gold rush and construction of a national railroad system–the number of New York banks increased from 24 to 57. Settlement procedures were unsophisticated, with banks settling their accounts by employing porters to travel from bank to bank to exchange checks for bags of coin, or “specie.” As the number of banks grew, exchanges became a daily event. The official reckoning of accounts, however, did not take place until Fridays, often resulting in record keeping errors and encouraging abuses. Each day, the porters would gather on the steps of one of the Wall Street banks for their “Porters’ Exchange.”