Sunshine Sentinel

WASHINGTON, D.C. – On July 20, 2023, Senator Rick Scott introduced a legislative package aimed at forcing accountability on the Federal Reserve, ending its bad practices that have cost Americans more than $1 trillion, and reining in the agency’s out-of-control, $8.3 TRILLION balance sheet. This package includes: the Regular Order for Investments (ROI) of the Federal Reserve Act to end the Fed’s bad practices and force the Fed to consider the impact of its decisions on hard-working American families so this never happens again; the Right-Size the Federal Reserve Act to ensure an unwinding of the Fed’s massive balance sheet by mandating that it remain at or below 10% of U.S. GDP; and the Rein in the Federal Reserve Act to interject much-needed scrutiny and accountability of the Fed’s actions by establishing a statutory process for more strict oversight by Congress. Read more about the proposals in the Senator’s Washington Examiner op-ed HERE. 

This legislation builds on Senator Scott’s bipartisan bill to require a presidentially-appointed and Senate-confirmed inspector general to the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau. 

Senator Rick Scott said, “The lack of accountability and guardrails at the Federal Reserve have allowed the agency to make bad decisions with no consequences, growing its balance sheet to an unsustainable $8.3 trillion, making the Fed the largest agency, financially. Under Chair Powell’s leadership, the Fed has lost $1.3 trillion of your money just last year. It’s time for this insanity to stop. Hardworking American families shouldn’t be worried about the Federal Reserve making risky decisions that waste their hard-earned tax dollars. We cannot allow Americans to be forced to endure continued failures at the Federal Reserve any longer. This legislative package puts forward comprehensive reforms to rein in the Federal Reserve, better protect taxpayer money and make sure the Fed is truly accountable to Congress and the American people.” 

The Rein in the Federal Reserve Act:

• Interjects much needed scrutiny and accountability of the Federal Reserve’s actions by establishing a statutory process for actual oversight of the Federal Reserve:
  • Mandates that, whenever the Federal Reserve begins a quantitative easing or tightening program or any emergency facility falling under Section 13.3 of the Federal Reserve Act, the Federal Reserve Board of Governors must submit a quarterly report to Congress, the public, and both the Senate Banking Committee and the House Ways and Means Committee regarding any new program or emergency spending facility that has been initiated.
  • Requires that, after one calendar year from beginning the emergency spending program, the Federal Reserve must receive new authorization from Congress in order to continue its emergency spending program.
  • Allows Congressional Resolutions of Disapproval (CRAs) for any standing or emergency Federal Reserve facility.

The Regular Order for Investments (ROI) of the Federal Reserve Act:

• Ends the corrupted financial practices of the Federal Reserve by:
  • Requiring the Federal Reserve System to comply with Generally Accepted Accounting Practices (GAAP) like every other bank and business operating in the United States.
  • Requiring the Federal Reserve to use ‘mark-to-market’ valuations for its statutorily required financial reporting of assets and liabilities.
• Returns the Federal Reserve to its traditional asset purchases and stop the mission creep of the Federal Reserve to further intervene in different capital markets by:
  • Prohibiting the Fed from purchasing any Mortgage Backed Securities (MBS) beginning at the date of enactment.
  • Require the Fed to purchase only short-term Treasuries (up to 3-year maturities) beginning at the date of enactment of this bill.
  • Explicitly prohibit the Fed from directly or indirectly holding common stock.

The Right-Size the Federal Reserve Act:

• Brings sanity back to the Fed’s balance sheet by:
  • Capping the size of the Federal Reserve System’s balance sheet at 10% of US GDP.
  • Requiring the Federal Reserve System to submit to Congress annually a report on its plan and timeline to meet the provisions of this bill.
• Addresses the address the perverse incentives creating by the Federal Reserve by:
  • Requiring that the Federal Reserve’s Reserve Requirements for depository institutions shall not be lower than those in effect prior to March 26, 2020.
  • Prohibiting the Federal Reserve from paying interest on excess bank reserves, allowing the Fed to only pay interest to banks on its required reserves, and
  • Requiring an annual report from the Federal Reserve on how many foreign-owned banks and financial institutions it has paid on interest for reserves or in its facilities and operations since 2000.

Original source can be found here.