Federal Reserve Board Abolition Act
- Bill Number
- S. 869
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2025-03-05: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- Last Updated
- 2025-12-05T06:40:29Z
AI-Generated Summary
Purpose
The Federal Reserve Board Abolition Act (S. 869) aims to eliminate the central banking system in the United States by abolishing the Board of Governors of the Federal Reserve System and the 12 Federal Reserve banks. It repeals the Federal Reserve Act of 1913, which established this system, and provides a structured process for winding down operations, liquidating assets, and transferring responsibilities to the U.S. Department of the Treasury.
Key Provisions
- Abolition and Repeal Timeline: The Board of Governors and Federal Reserve banks are abolished, and the Federal Reserve Act is repealed, effective one year after the bill's enactment.
- Management During Wind-Down: For the one-year period before abolition, the Chairman of the Board manages employee compensation, benefits, and the assets/liabilities of the Board and banks. All actions require approval from the Secretary of the Treasury.
- Liquidation of Assets: The Director of the Office of Management and Budget (OMB) oversees the orderly sale of all assets to maximize returns. After paying valid claims and redeeming bank stock held by member banks, net proceeds go to the U.S. Treasury's General Fund.
- Assumption of Liabilities: The Treasury assumes all outstanding debts of the Board and banks, including retirement and employee benefits. Funds from the asset liquidation are appropriated to cover these costs until fully paid.
- Reporting Requirement: Within 18 months of enactment, the Secretary of the Treasury and OMB Director must submit a joint report to Congress detailing implementation actions and any unresolved issues.
Significant Changes to Existing Law
- Repeal of the Federal Reserve Act: This 1913 law created the Federal Reserve as the nation's central bank, granting it authority over monetary policy (e.g., setting interest rates, regulating banks, and managing the money supply). Its repeal removes these powers entirely.
- Shift in Responsibilities: Monetary and financial oversight functions previously handled by the Federal Reserve transfer to the Treasury, fundamentally altering the structure of U.S. economic regulation without specifying a replacement system.
- End of Federal Reserve Structure: The 12 regional banks, which operate semi-independently, and the seven-member Board of Governors in Washington, D.C., cease to exist, ending a century-old framework for decentralized central banking.
Potential Impacts
- On Government Agencies: The Treasury gains control over Federal Reserve liabilities and assets, potentially increasing its role in financial management. The OMB handles liquidation, which could strain resources. No new central bank means Congress or Treasury may need to address monetary policy gaps, affecting fiscal operations.
- On Citizens: Everyday banking, loans, and savings could face disruptions, as the Federal Reserve influences interest rates, inflation, and economic stability. Without it, currency issuance and payment systems (e.g., check clearing) might shift to other entities, potentially leading to economic uncertainty or changes in financial services access.
- On International Relations: The U.S. dollar's global role as a reserve currency relies on Federal Reserve stability. Abolition could erode confidence in U.S. financial systems, affecting trade, foreign investments, and relationships with international banks or central banks worldwide.
Main Stakeholders Affected
- Federal Reserve Employees and Officials: Thousands of staff face job loss after one year; benefits and pensions transfer to Treasury responsibility.
- Member Banks and Financial Institutions: Banks that own Federal Reserve stock get redemption; they lose access to Federal Reserve services like lending facilities, impacting operations.
- U.S. Government (Treasury and Congress): Treasury assumes financial burdens and gains assets; Congress must oversee the transition and possibly enact new laws for monetary policy.
- General Public and Economy: Businesses, consumers, and investors are indirectly affected through potential shifts in inflation control, banking stability, and economic growth.
Notable Legal, Constitutional, or Political Implications
- Legal Implications: The bill's repeal of the Federal Reserve Act could trigger lawsuits over contracts, employee rights, or asset dispositions. It assumes Treasury authority without detailing how core functions (e.g., regulating money supply) will continue, potentially creating legal voids.
- Constitutional Implications: Article I, Section 8 of the U.S. Constitution grants Congress power "to coin Money, regulate the Value thereof," which the Federal Reserve has exercised under delegated authority. Repeal returns this directly to Congress or Treasury, raising questions about separation of powers and executive overreach.
- Political Implications: As an introduced bill referred to the Senate Committee on Banking, Housing, and Urban Affairs, it represents a radical policy shift unlikely to pass without broad debate. It could polarize views on government intervention in the economy, echoing historical debates on central banking since the 19th century.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2025-03-05: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- 2025-03-05: Introduced in Senate
Bill Versions
- Federal Reserve Board Abolition Act — issued 2025-03-05 — PDF (4 pages)