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119-s-1648119th CongressWALLET

Right-size the Federal Reserve Act

Sponsored By: Senator Scott, Rick [R-FL]

Introduced

Summary

Caps the Federal Reserve's total assets at 10% of U.S. GDP. This bill would also require the Fed to close its Overnight Reserve Repurchase Facility within 1 year and add annual reporting on interest paid to foreign-owned banks.

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  • Would limit the aggregate assets of all Federal Reserve Banks to 10% of GDP, with that cap taking effect 10 years after enactment.
  • Requires the Board of Governors to eliminate the Overnight Reserve Repurchase Facility within 1 year and prohibits creating a similar facility. The Board must submit a plan and timeline to Congress within 1 year and update it annually.
  • Obligates the Board and each Federal Reserve Bank to report annually to Congress how many foreign-owned banks and financial institutions received interest on reserves or used Board lending facilities. It also amends reserve-requirement text to require measures no lower than the reserves in effect on March 25, 2020 and clarifies that described reserves are not in excess of required reserves.

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Bill Overview

Analyzed Economic Effects

3 provisions identified: 0 benefits, 0 costs, 3 mixed.

Cap Federal Reserve assets at 10% GDP

If enacted, this bill would limit total assets of all Federal Reserve Banks to no more than 10% of U.S. GDP. The asset cap would take effect 10 years after enactment. The cap would limit the Fed's ability to buy assets or expand its balance sheet in a crisis. Households would be affected only indirectly through possible changes in markets and interest rates.

End Overnight Reserve Repurchase Facility

If enacted, this bill would require the Federal Reserve Board to eliminate the Overnight Reserve Repurchase Facility within 1 year after enactment. The Board would be barred from creating another facility that is similar. The bill also would require the Board to submit to Congress a plan and timeline within 1 year and then annually on meeting these rules. Households could feel indirect effects if short-term market liquidity or funding costs change.

Set bank reserve floor at March 25, 2020

If enacted, this bill would change bank reserve rules so a referenced reserve measure must not be lower than reserve requirements in effect on March 25, 2020. It would also limit referenced reserves to amounts not in excess of required reserves under the statute. The change would take effect on enactment and could require banks to hold more reserves. That could reduce bank lending and raise borrowing costs for households and businesses.

Sponsors & CoSponsors

Sponsor

Scott, Rick [R-FL]

FL • R

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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