Sponsors
The bill increases Fed transparency and limits the central bank’s footprint (benefiting oversight and some perceptions of systemic risk and raising reserve returns for banks) at the cost of reducing the Fed’s flexibility to provide emergency liquidity and potentially raising borrowing costs for households and businesses.
Taxpayers and the public gain from a smaller Fed balance sheet over time, which may reduce the perceived systemic risk of an outsized central bank footprint and constrain future monetary expansion.
Banks holding required reserves receive a guaranteed minimum return at least as high as the rate in effect on March 25, 2020, raising income for those institutions.
Congress and the public gain more transparency about which foreign‑owned banks received interest payments from Fed reserve or lending facilities, improving oversight of Fed payments.
All Americans could face greater risk during future crises because capping Fed assets and banning similar facilities would reduce the Fed’s flexibility to provide emergency liquidity support.
Middle‑class families and small businesses may face higher long‑term borrowing costs if restrictions on Fed balance‑sheet growth prevent the Fed from expanding accommodation during downturns.
Financial institutions and taxpayers could see increased short‑term money‑market volatility and funding costs if the Overnight Reserve Repurchase Facility is eliminated, removing a tool for managing liquidity.
Based on analysis of 2 sections of legislative text.
Imposes reporting requirements, sets a floor for interest on reserves, bans a Fed facility, and caps total Federal Reserve Bank assets at 10% of GDP (effective in 10 years).
Introduced May 7, 2025 by Richard Lynn Scott · Last progress May 7, 2025
Requires the Federal Reserve Board and each Reserve Bank to report annually on interest payments to foreign‑owned banks, sets a minimum interest payment rate on reserves tied to the rate in effect March 25, 2020, and forces the Fed to close a specified short‑term facility within one year and bar similar facilities. It also caps the combined assets of all Federal Reserve Banks at 10% of U.S. GDP, starting 10 years after enactment, and directs the Board to submit a plan and timeline within one year and annually thereafter for meeting these requirements.