SB1647, titled the “Regular Order for Investments of the Federal Reserve Act” or the “ROI of the Federal Reserve Act,” would amend the Federal Reserve Act in several ways. First, it would require the Board of Governors of the Federal Reserve System and each Federal Reserve Bank to submit annual reports to Congress on two topics: the status of the U.S. middle class and the impact of Federal Reserve policies on small business lending and lines of credit since 2000. These reports would specifically examine how the Fed’s balance sheet, lending facilities, and interest paid on reserves have affected business credit and lending.
The bill would also place new limits on Federal Reserve Bank investments. It would prohibit Reserve Banks, after enactment, from purchasing Treasury bills with maturities longer than three years, from purchasing mortgage-backed securities, and from directly or indirectly holding shares of common stock acquired on or after the enactment date. In addition, the bill would require that accounting principles used in filings by the Board, the Federal Open Market Committee, and Reserve Banks conform to generally accepted accounting principles (GAAP), and it would require mark-to-market valuations for certain financial estimates in reports or audits.
Impact
If enacted, SB1647 would narrow the Federal Reserve’s investment authority and impose more detailed reporting and accounting requirements on the central bank. It would amend sections of the Federal Reserve Act governing Reserve Bank investments and add a new section on accounting principles and valuations. The bill would affect the Board of Governors, the Federal Open Market Committee, and the Federal Reserve Banks by changing how they report to Congress and how they value and present certain financial information, while also limiting future holdings of longer-dated Treasury bills, mortgage-backed securities, and common stock.
Sentiment
Based on the bill text and the absence of recorded committee debate or votes in the provided materials, the bill appears to be framed as a reform and oversight measure aimed at increasing transparency and constraining Federal Reserve investment practices. The overall tone of the proposal is critical of current Federal Reserve policies, especially regarding balance-sheet management, credit conditions, and accounting practices. No formal vote history or transcript evidence is available here to show broader bipartisan support or opposition.
Contention
The likely points of contention are the restrictions on Federal Reserve asset purchases and the mandated use of GAAP and mark-to-market accounting. Supporters would likely view these provisions as improving transparency, accountability, and discipline at the central bank. Critics may argue that the bill would unduly limit the Federal Reserve’s flexibility in conducting monetary policy, managing its portfolio, and responding to financial stress, and that requiring mark-to-market valuations could create volatility or distort reporting. The reporting on the middle class and small business lending may also be seen as politically charged because it asks the Fed to assess the social and credit-market effects of its policies.
Federal Reserve Transparency Act of 2023 This bill establishes requirements regarding audits of certain financial agencies performed by the Government Accountability Office (GAO). Specifically, the bill directs the GAO to complete, within 12 months, an audit of the Federal Reserve Board and Federal Reserve banks. In addition, the bill allows the GAO to audit the Federal Reserve Board and Federal Reserve banks with respect to (1) international financial transactions; (2) deliberations, decisions, or actions on monetary policy matters; (3) transactions made under the direction of the Federal Open Market Committee; and (4) discussions or communications among Federal Reserve officers, board members, and employees regarding any of these matters.