FAIR Act
- Bill Number
- S. 2499
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2025-07-29: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- Last Updated
- 2025-12-05T22:56:37Z
AI-Generated Summary
Purpose of the Legislation This bill amends the Federal Reserve Act to eliminate a provision that permits the payment of earnings on balances maintained by depository institutions at Federal Reserve Banks.
Key Provisions
- Short Title: The legislation is named the Fiscal Accountability for Interest on Reserves Act (FAIR Act).
- Amendment: It strikes paragraph (12) from Section 19(b) of the Federal Reserve Act (12 U.S.C. 461(b)), which currently addresses earnings on balances.
- Effective Date: The change takes effect 180 days after the bill becomes law.
Significant Changes to Existing Law
- Removes the statutory authority for the Board of Governors of the Federal Reserve System to pay interest or earnings on reserve balances held by banks and other depository institutions.
- This reverses a provision that has allowed such payments since its addition to the Federal Reserve Act.
Potential Impacts
- Government Agencies: Alters Federal Reserve operations by ending interest payments on reserves, which could affect the central bank's balance sheet and monetary policy tools.
- Citizens: May reduce transfers from the Federal Reserve to depository institutions, potentially increasing amounts remitted to the U.S. Treasury and affecting taxpayers indirectly.
- International Relations: No direct effects are specified in the bill.
Main Stakeholders Affected
- The Federal Reserve System and its Board of Governors.
- Depository institutions, such as commercial banks that hold reserve balances.
- The U.S. Congress, which oversees Federal Reserve policy through legislation.
- U.S. taxpayers, due to the connection between Federal Reserve earnings and Treasury remittances.
Notable Legal, Constitutional, or Political Implications
- Legal: Directly modifies an existing section of the Federal Reserve Act, narrowing the central bank's statutory powers regarding reserve management.
- Constitutional: Reinforces Congress's role in setting the boundaries of Federal Reserve authority under the Constitution's Commerce Clause and related powers.
- Political: Frames the change as a measure for greater fiscal accountability by limiting interest payments on reserves.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Recent Actions
- 2025-07-29: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- 2025-07-29: Introduced in Senate
Bill Versions
- Fiscal Accountability for Interest on Reserves Act — issued 2025-07-29 — PDF (2 pages)