Congress moves to cap Fed's balance sheet and eliminate emergency lending tool

What it does

This bill caps the total assets of all Federal Reserve banks at no more than 10% of U.S. GDP, effective 10 years after enactment. It requires the Fed to eliminate the Overnight Reserve Repurchase Facility within one year and prohibits creating a similar facility. It also mandates annual reporting to Congress on foreign-owned banks receiving interest payments from the Fed and restores reserve requirements to March 2020 levels. The primary beneficiary is Congress, which gains oversight and constraint over Fed balance-sheet expansion; the primary cost falls on the Federal Reserve's operational flexibility during financial stress.

Why we flagged it

The bill's operative mechanism is a statutory cap on Fed assets, elimination of an emergency lending facility, and mandatory reporting to Congress. This is fundamentally a constraint on central-bank independence and balance-sheet size, framed as 'right-sizing' the Fed's role.

What the text implies

• The 10-year phase-in delays the asset cap's effect, but markets may begin pricing in the eventual constraint immediately, potentially affecting long-term Fed credibility and inflation expectations.
• Elimination of the Overnight Reserve Repurchase Facility removes a key tool the Fed used during the 2019 repo crisis and COVID-19 pandemic; absence of this tool in a future crisis could force the Fed to rely on more disruptive emergency measures or leave it unable to respond.
• Restoring March 2020 reserve requirements (pre-pandemic levels) may reduce banks' liquidity buffers relative to current regulatory standards, potentially tightening credit availability.
• Annual reporting on foreign-owned banks receiving Fed interest payments may signal political pressure on the Fed to discriminate against foreign institutions, raising questions about Fed independence and international financial stability.
• The bill does not define 'similar facility,' creating ambiguity about what the Fed can or cannot create as a substitute for the eliminated repo facility.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Citizens benefit from increased congressional oversight of the Fed and constraints on unchecked balance-sheet growth, which may reduce moral hazard and inflation risk. However, the 10-year phase-in and elimination of emergency lending facilities may reduce the Fed's ability to respond to future financial crises, potentially harming ordinary people through reduced credit availability or deeper recessions if emergency tools are unavailable.

Named in the bill

Federal Reserve System, Board of Governors of the Federal Reserve System, Federal reserve banks, Congress, Overnight Reserve Repurchase Facility, U.S. gross domestic product

Where it stands

• May 7, 2025 — Introduced · Congress.gov: “Introduced in Senate”
• May 7, 2025 — Referred to Senate Committee on Banking, Housing, and Urban Affairs · Congress.gov: “Read twice and referred to the Committee on Banking, Housing, and Urban Affairs”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

1 lobbying clients named this bill on 2 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $0 in lobbying spend. A filing names 33 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 0% of bills with at least one filing.

Rick Scott, the sponsor, reported $69,750 in PAC receipts in the 2026 cycle.

• Nebraska Hospital Association — $0 on 2 filings

Lobbying Disclosure Act filings through Jul 13, 2026. A filing shows who paid to lobby on a bill it names, not what changed.