While DOGE has backed off on installing its programmers because of court injunctions and public blowback, it is still working to directly use control of the Treasury’s payment system to pursue impoundment. In fact, it appears that payments level impoundment had already briefly been in effect before I had even published my February 3 Rolling Stone column. Meanwhile, court documents litigating an injunction over DOGE’s access to the Bureau of Fiscal Service explosively revealed that using the payments system to impound funds and second guess agencies had already gone further and faster than I thought it could. And Musk’s ally from DOGE, Thomas Krause, has been made acting Fiscal Assistant Secretary — taking David Lebryk’s job. So while the worst case scenarios have been put off the table and a court injunction is in place, we remain in the midst of a supercharged constitutional crisis.
On February 11, 2025, the Federal Emergency Management Agency (FEMA), an agency housed in the Department of Homeland Security, removed $80.5 million from New York City’s main bank account, which is an account with Citibank. Well, that’s not exactly accurate. They “debited,” the financial way of referring to “subtracting,” New York City’s “central treasury account” for $80.5 million. According to public statements by Brad Lander, New York City’s comptroller, this could only be covered by a line of credit facility to the tune of $79.5 million. In short they, in essence, sent New York City’s main bank account to negative $79.5 million to rescind routine funding appropriated by Congress to house refugees. Citibank kindly agreed to forgive the overdraft fee.
[R]eaders must understand some things about the payments system they use every day without thinking about it. If you have ever gotten a direct deposit of pay, or really anything else, you have used a system called the Automatic Clearing House system or “ACH.” Social Security payments are ACH payments, as are payments to medical providers.
The rules for ACH are mainly determined by “National Automated Clearing House Association” (NACHA, now “Nacha”). The actual payments infrastructure is run by the 12 Federal Reserve Banks along with “The Clearing House,” a clearinghouse originally set up by large New York banks all the way back in 1853.
The Automated Clearing House payment system is one of the foundational building blocks of all payments made in our society. Nearly every payment you make is either an ACH payment or it relies indirectly on accurate and timely ACH payments. Furthermore, any institution you rely on directly or indirectly relies on accurate and timely ACH payments to function properly.
There is nothing in payments law that provides a clear or unambiguous check on the Trump administration’s actions if they decide to weaponize the federal government’s legal authority over the ACH system.
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