Senators Rick Scott of Florida and Ted Cruz of Texas have introduced the Fiscal Accountability for Interest on Reserves (FAIR) Act, which aims to end the Federal Reserve’s authority to pay interest on reserve balances. This practice has resulted in significant payments from taxpayers to large banks and foreign financial institutions.
According to the Foundation for Government Accountability (FGA), the Federal Reserve has been operating at a loss since 2022 due largely to high interest payments on bank reserves. In 2024, more than $186 billion was paid out in this way, funds that would otherwise have gone to the U.S. Treasury. Projections indicate that over the next ten years, these payments could exceed $1 trillion while the national debt is already above $36 trillion.
The proposed FAIR Act seeks to amend existing law by removing the provision that allows such interest payments. FGA President and CEO Tarren Bragdon stated, “Senators Rick Scott and Ted Cruz are boldly leading the charge on a straightforward issue: The Fed has got to stop draining taxpayer dollars to pad big bank profits.” He added, “Our taxpayer-funded treasury is not a piggy bank for foreign banks to raid. Congress must act swiftly to pass the FAIR Act to finally face our $36 trillion debt crisis and stop eroding the standard of living for hardworking Americans.”
Bragdon also commented on legislative momentum: “With Rep. Davidson pushing in the House and Senators Scott and Cruz now advancing the fight in the Senate, momentum is building. Every day this issue is not solved, even more resources are diverted to big banks, which limits capital available for job creators and keeps interest rates high for American families and small businesses.”
The Foundation for Government Accountability describes itself as a non-profit think tank focused on promoting public policy solutions aimed at expanding opportunities across America.
