Florida, Texas Senators slam FED for handing billions to big banks: “Let’s restore fiscal sanity to the nation”
Florida – Senators Rick Scott from Florida and Ted Cruz from Texas have teamed up to introduce a bill that would stop what they call a costly and misguided practice by the Federal Reserve. The Fiscal Accountability for Interest on Reserves (FAIR) Act wants to put a stop to the Federal Reserve’s long-standing practice of paying banks interest on their reserve accounts. The senators say this policy has misguided taxpayer money and increased the national debt.
Scott and Cruz say that the Federal Reserve paid out more than $186 billion in 2024 alone through its Interest on Reserve Balances program. They also say that total payouts might reach over $1 trillion in the next ten years. The senators say that the main beneficiaries are big banks, including some from other countries, which get up to half of these payments.
They say that this method not only takes money away from the government or the national debt, but it also gives huge banks an unfair advantage in the financial world. Senator Scott, who often criticizes Fed Chair Jay Powell, didn’t hold back.
“The Federal Reserve under Jay Powell’s leadership has been a failure to the American people,” Scott said.
“Our bill, the FAIR Act, is a great step to refocusing the Fed on American families by stopping their ability to pay interests to banks on reserves. We must force change at the Federal Reserve to put families’ best interest first, bring accountability to the Federal Reserve, and restore fiscal sanity to the nation – my FAIR Act is a great step and I urge my colleagues to pass this ASAP.”
He further criticized the Fed’s lack of fiscal discipline, citing its ongoing financial losses and lack of remittances to the U.S. Treasury since 2022.
Senator Cruz echoed this sentiment, calling the Fed’s interest payments a gift to major financial institutions at the expense of everyday Americans.
“The Federal Reserve’s authority to pay interest on reserves rewards big banks—including large foreign banks—at the expense of all Americans,” Cruz said.
“The FAIR Act replaces this authority—reducing the deficit, allowing more small businesses to access capital, and putting the Fed back on a path of fiscal responsibility. The Fed should not be in the business of increasing foreign banks’ profits, and I strongly urge my colleagues to pass this bill without delay.”
Backing the Senate effort, Representative Warren Davidson of Ohio is leading the companion bill in the House. Davidson argued that the Fed’s role should not involve subsidizing banks to hoard capital.
“If banks want returns, they should deploy their capital by making loans,” he said. “Market economies need capital, not central planning. I’m glad to sponsor the House version of the Fiscal Accountability for Interest on Reserves Act to end this nonsensical practice.”
This isn’t Scott’s first move against the central bank. He has put forward various measures aimed at the Federal Reserve in the past, such as one that would cut its size, give it more accountability, and do a comprehensive audit. He has also been a strong supporter of setting up an independent Inspector General for the Fed and has identified ethical issues with how it does business.
Lawmakers who think the Federal Reserve has to be more accountable and in line with the country’s overall fiscal goals are pushing the FAIR Act. Scott and Cruz want the law to pass quickly because they claim the existing system helps just a handful of powerful people while hurting taxpayers and small businesses.
Whether the legislation gains traction remains to be seen, but its introduction signals growing frustration among some lawmakers over the Fed’s operations and its influence on national financial priorities.
