U.S. Senator Rand Paul (R-KY) addressed the Senate regarding his proposed amendment to the Fiscal Year 2026 National Defense Authorization Act. The amendment, called the End the Fed’s Big Bank Bailout Act, sought to eliminate two types of interest payments by the Federal Reserve: Interest on Reserve Balances (IORB) and the Overnight Reverse Repurchase Agreement (ONRRP). These payments have resulted in over half a trillion dollars in costs to taxpayers over the past five years.
The Senate voted against the amendment, with 14 senators in favor and 82 opposed.
During his remarks, Senator Paul stated, “The Federal Reserve pays both foreign and domestic banks to simply park their money in Fed accounts. In other words, to not loan money at all. Over the past five years, the Fed’s big bank bailout amounts to over half a trillion dollars.
This bailout causes the Fed to operate at a loss, which means that the Fed cannot remit profits to the taxpayer as it normally does. According to the economist Judy Shelton, if these payments stopped, banks would buy treasury securities and would bring interest rates down.
Some people say that this program is a floor to interest rates. My amendment ends these subsidies. Let’s end the Fed’s big bank bailout. Let’s lower interest rates. Please vote for my amendment.”
The proposal highlighted concerns about how current Federal Reserve policies affect federal remittances and market interest rates but did not pass in the Senate.
