Federal Reserve Abolition Act: Bill Mandates Complete Shutdown of Central Bank Within One Year

This bill, officially titled the Federal Reserve Board Abolition Act, does exactly what it says on the tin: it completely shuts down the entire Federal Reserve System, which includes the Board of Governors and all 12 regional Federal Reserve banks. This massive change is scheduled to happen one year after the law is enacted, and when it does, the original Federal Reserve Act that created the system back in 1913 is repealed. Essentially, this legislation rips out the engine of the U.S. financial system.

The One-Year Wind-Down

For the 12 months leading up to the shutdown, the current Fed Chairman gets the unenviable job of being the chief liquidator. Their only role during this period is to manage the closing process, which includes paying out final compensation and benefits to all employees—because everyone is losing their job. The Chairman also manages the Fed’s massive assets and debts until the Treasury Secretary takes over. Any major decisions the Chairman makes during this time must be approved by the Secretary of the Treasury. This isn’t a transition; it’s a controlled demolition.

Asset Fire Sale and Debt Transfer

Once the Fed is officially gone, the Director of the Office of Management and Budget (OMB) steps in to sell off all the Fed’s remaining assets. The bill explicitly mandates that the OMB Director must sell these assets as quickly as possible while somehow also trying to get the best possible return for the Treasury. For anyone who’s ever tried to sell a house quickly, you know those two goals usually cancel each other out. This provision could mean a massive fire sale where speed wins over value, potentially shortchanging the U.S. Treasury. After all the Fed’s debts are paid off, any remaining money goes straight into the General Fund of the Treasury.

The Treasury Inherits the Mess

Here’s where the liability shifts: every outstanding debt, obligation, and responsibility the Fed had—including the retirement and benefits for all its former staff—automatically becomes the problem of the Secretary of the Treasury. This means the Treasury has to set aside funds to cover these massive, long-term costs. For the average taxpayer, this is a big deal because it means the responsibility for managing the financial fallout, and paying for the pensions and benefits of thousands of former Fed employees, transfers directly from the independent central bank onto the government’s books, potentially straining the General Fund. Eighteen months after the law takes effect, the Treasury Secretary and the OMB Director have to deliver a joint report to Congress detailing the entire, complex closure process.