Sponsors
The bill increases transparency and accounting discipline at the Federal Reserve and limits its holdings to reduce market distortions, but it also constrains the Fed's crisis-response tools and may raise borrowing costs and reported volatility, trading short-term operational flexibility for greater oversight and market purity.
Middle-class families and small-business owners will receive mandated annual reports showing how Federal Reserve policies affected middle-class growth and access to lending, improving transparency and informing Congressional oversight.
Financial institutions, investors, auditors, and taxpayers will get more consistent, comparable Fed financial statements because the bill requires GAAP accounting and mark-to-market valuations for Reserve Bank filings and audits.
Homeowners, long-term debt issuers, and markets generally may face fewer distortions because Reserve Banks are prohibited from buying mortgage-backed securities, Treasuries with maturities over three years, or newly acquired common stock, reducing the Fed's footprint in those asset classes.
Restricting Reserve Banks from buying MBS and longer-dated Treasuries reduces the Fed's toolkit to stabilize markets in crises, potentially increasing interest-rate volatility and tightening credit for households and businesses during downturns.
Prohibiting certain asset purchases could push liquidity and interest-rate risk onto private investors, likely raising borrowing costs for homeowners and issuers of long-term debt.
Mandating GAAP and mark-to-market accounting may force the Fed to report larger, potentially volatile book losses, creating political pressure and possible misinterpretation of economic health despite not reflecting realized losses.
Based on analysis of 2 sections of legislative text.
Introduced May 7, 2025 by Richard Lynn Scott · Last progress May 7, 2025
Requires the Federal Reserve Board, the Federal Open Market Committee, and each Federal Reserve Bank to produce annual reports to Congress on the condition of the U.S. middle class and on how Fed actions since 2000 have affected small-business lending. Bars Federal Reserve Banks, on enactment, from buying Treasury securities with maturities over three years, from buying mortgage-backed securities, and from holding common stock acquired on or after enactment. Also requires Fed entities to use generally accepted accounting principles (GAAP) and mark-to-market valuations in specified reports and audits.