The Foundation for Government Accountability (FGA) applauds Senator Rick Scott (R-FL) and Senator Ted Cruz (R-TX) for introducing the Fiscal Accountability for Interest on Reserves (FAIR) Act, a bold move to end the Federal Reserve’s authority to pay Interest on Reserve Balances (IORBs). This practice has funneled hundreds of billions of dollars in taxpayer money to big banks and foreign financial institutions, harming taxpayers and domestic businesses, and keeping inflation high.
The Federal Reserve has operated at a loss since 2022, primarily due to record-high interest payments on bank reserves. In 2024 alone, the Fed paid more than $186 billion in IORBs, which would have otherwise gone to the U.S. Treasury. Over the next decade, these payments are projected to exceed $1 trillion, representing a massive fiscal drain at a time when the national debt is more than $36 trillion.
The FAIR Act would amend the Federal Reserve Act to eliminate the provision that allows these interest payments, restoring much-needed transparency and accountability to the Fed’s balance sheet.
“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,” said Tarren Bragdon, President and CEO at FGA. “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.”
“With Rep. Davidson pushing in the House and Senators Scott and Cruz now advancing the fight in the Senate, momentum is building,” Bragdon continued. “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.”
