Congress proposes dismantling the Federal Reserve with no backup plan
S. 869 — Federal Reserve Board Abolition Act · Filed by Mike Lee (R-UT) · Introduced Mar 5, 2025 · Referred to committee
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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 full analysis lists 5 implications of this text.
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)