Sponsor
Warren Davidson
Representative · R-OH
Representative · R-OH
The bill removes a statutory provision and gives a 180-day transition to simplify Fed compliance and operations, but risks creating legal and compliance uncertainty that could raise costs for banks and potentially expose taxpayers to indirect expenses.
Federal Reserve and affected institutions: Provides a 180-day transition period for the Federal Reserve and affected financial institutions and employees to adjust policies and operations, reducing immediate disruption from the statutory change.
Financial institutions and the Fed: Eliminates a specific statutory provision that could simplify Federal Reserve compliance obligations under section 19(b), potentially reducing regulatory complexity for affected institutions.
Banks and other financial institutions: May lose an existing exemption or defined-earnings treatment, creating compliance uncertainty and producing operational and administrative costs for banking organizations.
Banks, the Federal Reserve, and taxpayers: Reduces clarity around the Fed's authority under section 19(b), increasing the risk of legal challenges, regulatory gaps, or operational disruptions that could affect banking operations.
Taxpayers: Could lead to indirect costs for taxpayers if the statutory change impairs Federal Reserve operations or forces costly follow-on rulemaking to fill gaps.
Based on analysis of 2 sections of legislative text.
Deletes paragraph (12) of 12 U.S.C. § 461(b), removing a statutory provision that governs earnings on reserve balances and altering the Fed’s related authority.
Official title: To amend the Federal Reserve Act to strike a provision relating to earnings on balances, and for other purposes.
Introduced July 29, 2025 by Warren Davidson · Last progress July 29, 2025
Deletes a specific paragraph of the Federal Reserve Act that currently governs "earnings on balances" (12 U.S.C. § 461(b)), removing that statutory provision and changing the Board of Governors’ authority over interest on reserve balances. The deletion becomes effective 180 days after the bill is enacted and narrows the Fed’s existing statutory language for section 19(b).