This is the Cato Daily Podcast for Thursday, August 20th, 2015.

I'm Caleb Brown.

The Federal Reserve is now dabbling in fighting the federal war on drugs.

The agency has denied a so-called master account to cannabis entrepreneurs in Colorado working to create their own legal credit union.

George Selgin is a senior fellow and director of the Center for Monetary and Financial Alternatives at the Cato Institute, he says the Fed is once again overstepping its authority.

How far a field is it for the Federal Reserve to be getting involved in telling state-level businesses whether or not they're

bankable, essentially able to make use of payment systems in the United States.

These days, with the Fed constantly seeing how far it can push the envelope on its power,

it doesn't seem all that far afield in the sense that there doesn't seem to be any

limit that the Fed isn't willing to test when it comes to its own powers.

But of course it is very far a field indeed from what most people

understand to be the Fed's responsibilities which consist of seeing to there being as the Federal Reserve Act

in its amendment form says seeing to it that there be reasonable price stability and what they call maximum

employment. Now one can question whether that's one mandate too many if not two mandates that are both too many.

But in any event, there doesn't seem to be anything in the Federal Reserve Act that says that it should be deciding which businesses are legitimate and entitled to have access to banking services and which ones aren't.

So the specific issue here is whether or not marijuana dispensaries

which are operating in opposition to federal law but within the laws of their

own states have access to not only

credits but the payments systems that run across state lines which of course the

federal government regulates and the fourth corner credit union

among those institutions is suing the Federal Reserve Bank of Kansas City.

That's correct.

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