Treasury Payments Systems at Risk? The DOGE Dilemma and What It Means for Banks

The events of the Feb. 1 weekend are tough to get your head around. Elon Musk and his team at DOGE were given access to the U.S. Treasury payments system,  perhaps the world’s most sensitive and potentially impactful. That’s about $5 trillion worth of flows to just about every government vendor, Social Security, veteran, Medicare and Medicaid recipient. It is also the same system that does all of the tax collection.

Let that sink in if it hasn’t. The CEO of a huge social network and car company, through his Department of Government Efficiency (DOGE) affiliates, has access to the data about who gets paid and how much. This access was gained after what several news organizations characterized as a refusal by at least one high-ranking Treasury official — 30-year veteran David Lebryk — to provide that access. He has since retired from that post.

But what does DOGE having access to the Treasury Payments System mean? How does having access to this database differ from actually controlling who gets paid and when?

“The legal authority to stop payments. No, absolutely not,” QED investor partner Amias Gerety told Karen Webster Monday (Feb. 3). “They don’t have that legal authority. But this is a system; it’s a computer system. So, if you control the computer system, you control the payments. Now, is that illegal? Yes, it’s definitely illegal and it’s worth taking a step back,” Gerety told Webster.

He explained that while there has been speculation that DOGE officials were only granted “read-only” access, the specifics remain murky. Neither the White House nor the Treasury Department has publicly clarified the scope of DOGE’s involvement. The ambiguity alone, he says, is a red flag.

Serious Legal Questions

Gerety knows what he’s talking about. He formerly served for eight years in the Obama Administration, including as the president’s nominee and as Acting Assistant Secretary for Financial Institutions at the U.S. Department of the Treasury. He is a recipient of the Alexander Hamilton Award, the Treasury’s highest honor. Gerety pointed out during the discussion that the U.S. Treasury Department is a foundational part of the government, dating back to its earliest days. In 1789, the entire department was originally staffed by only five officials, as outlined in the law that established it. These officials included the Treasury Secretary and four others. It was created to control debt, payments, financial controls and the ability to fund the government.

Gerety believes litigation is a certainty if DOGE officials attempt to interfere with payments. The idea that a loosely defined entity like DOGE could interfere in this process is, in Gerety’s words, a “10-alarm fire.”

“This will end up in the courts if they stop payments,” he told Webster. “The mere fact of access, of read-only access, probably isn’t litigable. But the moment they try to block, delay or divert payments, lawsuits will fly.”

And Serious Economic Issues

Beyond the immediate questions of legality, Gerety highlights the broader economic consequences of uncertainty surrounding federal payments.

“If there’s one phrase that dominates discussions about the Treasury’s role in the nation’s finances, it’s ‘full faith and credit,’” he said. “The full faith and credit of the U.S. government should not be impeached. It’s literally in the [Constitution]. If you’re a bank, if you’re an investor, if you’re a government contractor, if you’re a retiree receiving Social Security — you have to ask, will my payments go through? That uncertainty should be felt around the world.”

The stakes aren’t just domestic, Gerety said. The U.S. Treasury’s financial stability underpins global confidence in the American economy. If DOGE’s involvement leads to delayed payments, political favoritism in fund distribution or even a mere perception of instability, he is concerned that it could undermine the dollar’s role as the world’s reserve currency.

For banks, which act as the Treasury’s fiscal agents, the uncertainty is particularly unsettling. While Gerety hasn’t spoken directly to financial institutions about the issue, he speculates that quiet but serious conversations are happening at the highest levels.

“My sense is that this is very strange. This is uncharted territory,” he said. Which banks don’t like. Gerety pointed out that they are contractually obligated to process payments for the Treasury. But if those payments are suddenly subject to political interference, they could face serious legal and reputational risks.

“If you think about this from the perspective of the very large banks that act as the Treasury’s fiscal agents, these banks make payments on behalf of the government,” he said. “If that system is compromised, what do they do? If the government stops paying them for their services, they can’t just continue making payments for free.”

Gerety suggests that banks are likely watching the situation closely, hoping it resolves itself without direct intervention. However, if DOGE’s influence grows, he believes financial institutions may be forced to take legal action to protect themselves — and, indirectly, the stability of the U.S. financial system.

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