Congress proposes dismantling the Federal Reserve with no backup plan

What it does

This bill would abolish the Federal Reserve Board and all 12 Federal Reserve banks within one year of enactment, repealing the entire Federal Reserve Act. During a wind-down period, the Fed's assets would be liquidated by the Office of Management and Budget, with proceeds transferred to the U.S. Treasury, while all Fed liabilities (including employee pensions and outstanding obligations) would become the responsibility of the Treasury Department.

Why we flagged it

The bill's core function is the complete elimination of the Federal Reserve System and replacement of its statutory authority with nothing — a radical restructuring of U.S. monetary governance with no successor institution named or described.

What the text implies

• No replacement mechanism for monetary policy is specified; the bill creates a 1-year vacuum in interest-rate setting, inflation management, and emergency lending authority.
• Deposit insurance coordination through the FDIC would lose its primary backstop; the bill does not clarify how the FDIC continues to function or guarantee deposits without Fed infrastructure.
• The Treasury Department would assume all Fed liabilities (estimated in the trillions) without explicit appropriation authority beyond liquidation proceeds, creating potential fiscal crisis.
• Liquidation of Fed assets (securities, loans, foreign exchange reserves) in an 'orderly manner' during market stress could destabilize global financial markets and the dollar's reserve-currency status.
• The bill does not address the Fed's role in payment systems, check clearing, or wire transfer infrastructure; abolition could paralyze banking operations.

Who it affects

Eliminating the Federal Reserve would remove the primary institution responsible for monetary policy, banking system stability, and lender-of-last-resort functions. Citizens would face potential financial instability, loss of deposit insurance coordination, disrupted credit markets, and uncertainty about who manages currency and inflation — all without a clear replacement mechanism. The bill offers no alternative institutional framework for these critical functions.

Who stands to gain

• Large banks (reduced regulatory oversight and capital requirements)
• Shadow banking and non-bank financial institutions (reduced systemic risk monitoring)
• Cryptocurrency and alternative payment systems (reduced central-bank competition)

Named in the bill

Federal Reserve Board, Federal Reserve Banks (12 regional banks), Board of Governors, Secretary of the Treasury, Office of Management and Budget, FDIC (implicit dependency), Federal Reserve Act

Where it stands

• Mar 5, 2025 — Introduced · Congress.gov: “Introduced in Senate”
• Mar 5, 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.