U.S. Senator Rand Paul (R-KY) spoke on the Senate floor regarding his proposed amendment to the Fiscal Year 2026 National Defense Authorization Act. The amendment, known as the End the Fed’s Big Bank Bailout Act, was brought forward for consideration in the Senate.
The legislation focuses on two Federal Reserve interest payment programs: Interest on Reserve Balances (IORB) and the Overnight Reverse Repurchase Agreement (ONRRP). According to Senator Paul, these mechanisms act as subsidies for large banks. Over the past five years, he said, they have cost taxpayers more than $500 billion.
The Senate voted against the amendment by a margin of 14-82.
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 measure did not pass in the Senate.
