Congress quietly removes a Federal Reserve earnings rule—effect unclear
H.R. 4789 — FAIR Act · Filed by Warren Davidson (R-OH) · Introduced Jul 29, 2025 · Referred to committee
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What it does
This bill removes a provision from the Federal Reserve Act that governs how the Federal Reserve handles earnings on reserve balances held by banks. The bill strikes Section 19(b)(12) of the Federal Reserve Act, effective 180 days after enactment. The specific effect depends on what that provision currently says—the bill itself does not restate it—but the operative mechanism is a deletion of an existing rule about Fed earnings distribution.
Why we flagged it
The bill is a narrow technical amendment to Federal Reserve Act Section 19(b)(12) governing reserve balance earnings. Its true functional effect—whether it redirects Fed earnings, alters bank compensation, or shifts fiscal flows—depends entirely on the content of the struck provision, which the bill does not restate.
What the text implies
- Striking Section 19(b)(12) may alter the distribution of Federal Reserve earnings between the Fed, banks, and the U.S. Treasury, with cascading effects on federal revenue and monetary policy independence.
- The 180-day delayed effective date suggests the Fed and banking sector may need time to adjust operations or accounting practices in response to the rule change.
- If the struck provision currently requires Fed earnings remittance to Treasury, removal could reduce federal revenue; if it caps bank earnings, removal could increase bank profitability.
Section numbers refer to the bill text the analysis read — linked under Primary records below.
Who it affects
The bill's civic effect cannot be fully assessed without knowing what Section 19(b)(12) currently requires. If it mandates Fed earnings distribution to the Treasury (reducing public revenue), striking it would harm citizens. If it restricts bank earnings, striking it would benefit banks at potential public expense. The text provides no restatement of the target provision, making a definitive verdict impossible from this bill alone.
Who stands to gain
- commercial banks (if Section 19(b)(12) currently restricts their earnings on reserves)
Named in the bill
Federal Reserve, Federal Reserve Act, Section 19(b)(12), U.S. Treasury, commercial banks
Where it stands
- Jul 29, 2025 — Introduced · Congress.gov: “Introduced in House”
- Jul 29, 2025 — Referred to House Committee on Financial Services · Congress.gov: “Referred to the House Committee on Financial Services”
Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.
How this was measured
Analysis — Quorum's AI read the bill text published by Congress.gov (372 characters) on Aug 12, 2026. Section numbers in the findings refer to that text, linked below; transparency and hidden-provision scores are compared against the median of 16,222 analysed bills.
Status and sponsors — Congress.gov's bill record — actions, committee referrals and cosponsors — loaded nightly. The timeline shows status changes, not every procedural action.
As of — page rendered 2026-10-20.
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