Fed earnings rule quietly deleted—but what was it protecting?
S. 2499 — FAIR Act · Filed by Rick Scott (R-FL) · 1 cosponsor · 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 specific provision being struck (Section 19(b)(12)) is not quoted in the bill itself, so its exact content and current effect cannot be determined from this text alone. The change takes effect 180 days after enactment.
Why we flagged it
The bill's sole operative function is to remove a specific subsection governing how the Federal Reserve treats earnings on reserve balances. Without the text of that subsection, the policy intent cannot be fully characterized, but the mechanism is a targeted statutory deletion affecting Fed-bank financial relationships.
What the text implies
- The bill's title ('Fiscal Accountability for Interest on Reserves Act') suggests a transparency or accountability purpose, but the operative text simply deletes a provision without explaining what it does or why deletion serves accountability.
- Section 19(b)(12) may currently require the Fed to pay interest on reserve balances at a specific rate, cap such payments, or mandate disclosure — striking it without replacement could shift discretion to the Fed or eliminate a constraint on bank earnings.
The full analysis lists 3 implications of this text.
Who stands to gain
commercial banks (primary holders of Federal Reserve reserve balances); large financial institutions