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Adds a new subsection (d) to section 2B requiring the Board and each Federal reserve bank to submit annual reports to Congress on (1) the status and health of the middle class and how Board/Federal reserve bank policies and programs affected it, and (2) the impact since 2000 of Board and Federal reserve bank actions on availability of small business lending and lines of credit, including effects of balance sheets, lending facilities, and interest paid on reserves.
Amends section 14(b)(2) by inserting an exception that, notwithstanding paragraphs (1) and (2), on and after enactment a Federal reserve bank may not purchase Treasury bills with maturities over 3 years, may not purchase mortgage-backed securities, and may not directly or indirectly hold shares of common stock acquired on or after enactment.
Amends the Federal Reserve Act to impose new reporting, purchasing, and accounting rules on the Federal Reserve Board, the Federal Open Market Committee, and each Federal Reserve Bank. It requires annual reports to Congress on middle‑class and small business lending, bans certain asset purchases and holdings after enactment, and requires filings and estimates to follow generally accepted accounting principles with mark‑to‑market valuations.
The Board and each Federal reserve bank must submit to Congress, annually, a report on the status and health of the middle class in the United States, including an analysis of how the policies and programs of the Board and the Federal reserve banks either positively or negatively impacted the growth of the middle class.
The Board and each Federal reserve bank must submit to Congress, annually, a report on the impact of the actions of the Board and the Federal reserve banks on the availability of small business lending and lines of credit since 2000, including how the balance sheet of the Federal reserve banks, the lending facilities of the Board, and interest paid on reserves have impacted business credit and lending.
On and after the date of enactment, a Federal reserve bank may not purchase a Treasury bill with a term of maturity that is more than 3 years.
On and after the date of enactment, a Federal reserve bank may not purchase a mortgage-backed security.
On and after the date of enactment, a Federal reserve bank may not directly or indirectly hold shares of common stock acquired on or after the date of enactment.
Who is affected and how:
Federal Reserve leadership and staff: The Board, FOMC, and each Reserve Bank must change reporting, accounting, and recordkeeping practices to comply with GAAP and mark‑to‑market valuation rules. They will need to produce annual reports to Congress focused on middle‑class and small business lending. Implementation will require legal, accounting, and disclosure work and may increase internal compliance and auditing costs.
Federal Reserve balance sheet and policy operations: Prohibitions on certain asset purchases and holdings constrain tools the Fed can use to expand its balance sheet (for example, some emergency or nontraditional asset purchase programs). That could limit flexibility in responding to financial stress or in conducting unconventional monetary policy.
Small businesses and middle‑class borrowers: The law increases congressional oversight of how Fed actions relate to lending for these groups through mandated reporting. The law does not itself compel more lending, but heightened oversight and limits on asset purchases could indirectly affect credit conditions, depending on Fed policy adjustments.
Financial markets and banks: Requiring GAAP and mark‑to‑market valuations may change how the Fed reports asset values and earnings, potentially increasing volatility in published Fed financials and affecting market perceptions. Banks and other financial firms may be indirectly affected by any changes in Fed policy tools or markets' reactions to altered Fed reporting and constraints.
Congress and public oversight: Congress will receive new, regular information on Fed actions and lending outcomes, enabling greater legislative oversight and public scrutiny.
Net effect: The measure increases transparency and legislative oversight but also constrains certain Fed operations and introduces accounting changes that could make reported results more variable and could change how the Fed conducts nonstandard operations. Actual economic impacts depend on the specific assets restricted and how the Fed adapts its policy toolkit in response.
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Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Introduced May 7, 2025 by Richard Lynn Scott · Last progress May 7, 2025
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Introduced in Senate