Federal Reserve Board Abolition Act
- Bill Number
- H.R. 1846
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2025-03-05: Referred to the House Committee on Financial Services.
- Last Updated
- 2025-12-05T21:51:06Z
AI-Generated Summary
Purpose
The Federal Reserve Board Abolition Act (H.R. 1846) aims to eliminate the central banking system established by the Federal Reserve Act of 1913. It seeks to dissolve the Board of Governors of the Federal Reserve System and the 12 regional Federal Reserve banks, repeal the underlying law that created them, and transfer their assets and liabilities to the U.S. Department of the Treasury for orderly wind-down.
Key Provisions
- Abolition Timeline: The Board of Governors and all Federal Reserve banks are abolished effective one year after the Act's enactment.
- Repeal of Federal Reserve Act: The entire Federal Reserve Act is repealed at the end of the same one-year period, ending the legal basis for the Federal Reserve's operations.
- Management During Dissolution: For one year, the Chairman of the Board of Governors oversees the wind-down, including managing employees (paying compensation and benefits until positions end), handling assets and liabilities, and taking necessary actions with approval from the Secretary of the Treasury.
- Liquidation of Assets: The Director of the Office of Management and Budget (OMB) liquidates all assets of the Board and banks in an orderly way to maximize returns. After paying accepted claims and redeeming bank stock, net proceeds go to the Treasury's General Fund.
- Assumption of Liabilities: The Treasury assumes all outstanding liabilities, including retirement and employee benefits, funded from the liquidated assets deposited in the General Fund.
- Reporting Requirement: Within 18 months of enactment, the Secretary of the Treasury and OMB Director submit a joint report to Congress detailing implementation actions and any unresolved issues.
Significant Changes to Existing Law
- This Act fundamentally alters U.S. monetary policy by repealing the Federal Reserve Act, which has governed the nation's central bank for over a century. It removes the Federal Reserve's authority to set interest rates, regulate banks, manage the money supply, and act as a lender of last resort during financial crises.
- No replacement structure is provided; instead, it shifts oversight of remaining financial responsibilities directly to the Treasury, eliminating the independent Federal Reserve system.
Potential Impacts
- On Government Agencies: The Treasury and OMB gain immediate responsibilities for liquidation and liability management, potentially straining resources. Without the Federal Reserve, the government loses a key tool for economic stabilization, which could lead to greater reliance on fiscal policy (e.g., direct spending or taxation) by Congress and the executive branch.
- On Citizens: Everyday banking, loans, and payments could face disruptions, as the Federal Reserve processes trillions in transactions daily and influences interest rates on mortgages, credit cards, and savings. Inflation control and employment stability might suffer, affecting household finances and economic growth.
- On International Relations: The U.S. dollar's role as the world's reserve currency could weaken, impacting global trade, foreign investments, and relations with countries holding U.S. debt. International banks relying on Federal Reserve services (like dollar clearing) may need new arrangements, potentially destabilizing global finance.
Main Stakeholders Affected
- Federal Reserve Employees and Officials: Thousands of workers face job loss after one year, though benefits are preserved during wind-down.
- Member Banks and Financial Institutions: Banks that own Federal Reserve stock lose that investment (redeemed during liquidation) and access to Federal Reserve services, such as emergency lending.
- U.S. Treasury and OMB: These agencies handle the complex liquidation and assume significant liabilities, altering their operational focus.
- General Public and Economy: All Americans are indirectly affected through changes to monetary policy, potentially leading to economic uncertainty or volatility.
- Congress: Gains direct oversight of monetary matters but must address the void left by the Federal Reserve.
Notable Legal, Constitutional, or Political Implications
- Legal Implications: The Act requires careful handling of contracts, debts, and ongoing operations to avoid lawsuits over sudden dissolution. Liabilities for employee benefits must comply with existing labor laws, and liquidation must follow federal asset management rules to prevent waste or fraud.
- Constitutional Implications: It invokes Congress's constitutional power (under Article I, Section 8) to coin money and regulate its value, shifting control from an independent agency back to elected branches. This could raise questions about separation of powers if the executive branch (via Treasury) dominates without sufficient congressional checks.
- Political Implications: Introduced by a group of libertarian-leaning representatives, the bill reflects ongoing debates over central banking's role and government intervention in the economy. Its passage would be highly controversial, likely facing opposition from financial sectors and requiring broad bipartisan support, which is improbable in the current polarized Congress. If enacted, it could inspire similar challenges to other independent agencies.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (11)
Rep. Biggs, Andy [R-AZ-5], Rep. Boebert, Lauren [R-CO-4], Rep. Burlison, Eric [R-MO-7], Rep. Cammack, Kat [R-FL-3], Rep. Cloud, Michael [R-TX-27], Rep. Crane, Elijah [R-AZ-2], Rep. Greene, Marjorie Taylor [R-GA-14], Rep. Hageman, Harriet M. [R-WY-At Large], Rep. Perry, Scott [R-PA-10], Rep. Roy, Chip [R-TX-21], Rep. Brecheen, Josh [R-OK-2]
Recent Actions
- 2025-03-05: Referred to the House Committee on Financial Services.
- 2025-03-05: Introduced in House
- 2025-03-05: Introduced in House
Bill Versions
- Federal Reserve Board Abolition Act — issued 2025-03-05 — PDF (4 pages)