Federal Reserve Regulatory Oversight Act
Federal Reserve Regulatory Oversight Act would insert a new provision (Sec. 11D) into the Federal Reserve Act to require that the Board of Governors of the Federal Reserve System and the Federal reserve banks fund their non-monetary policy related administrative costs through the annual appropriations process. In practice, this means the Fed would recover these costs via assessments and other fees that are treated as offsetting collections to the Fed’s appropriation account and may only incur expenses for these non-monetary functions if Congress has provided an appropriation. The bill limits this requirement to non-monetary policy related costs and explicitly excludes monetary policy costs. It also defines what counts as non-monetary policy related administrative costs and sets an effective date of October 1, 2025 for expenditures and collections under the new rule. The sponsors listed in the bill (Mr. Davidson and Mr. Donalds) appear to be driving the measure.
Key Points
- 1New appropriation requirement: The Fed (Board and Reserve Banks) must fund non-monetary policy related administrative costs through annual appropriations, recovering these costs via appropriations-eligible assessments and fees.
- 2Offsetting collections: Fees and assessments collected for these costs must be offsetting and credited to the Fed’s appropriation account; they may only be collected to the extent provided in advance by appropriation Acts.
- 3Scope and limitation: The requirement applies only to non-monetary policy related administrative costs and explicitly excludes monetary policy costs.
- 4Defined costs: Non-monetary policy related administrative costs include direct operating expenses for supervising/regulating entities, including examinations, stress tests, regulatory communications; operating expenses for supervisory/regulatory activities such as staff training, research/analysis, and processing regulatory reports; and related overhead and pension expenses.
- 5Effective date: The changes apply to expenses paid and fees collected on or after October 1, 2025.