The U.S. Senate Committee on Banking, Housing and Urban Affairs published floor remarks from Ranking Member Elizabeth Warren urging colleagues to support Senator Rand Paul’s amendment to prohibit the Federal Reserve from paying interest on overnight funds deposited by banks and shadow banks. Warren argued that the Federal Reserve began paying interest on such balances during the 2008 financial crisis and framed the policy as a subsidy to large financial institutions, citing USD 785 billion paid since 2008. She contested the Federal Reserve’s rationale that paying interest is necessary to manage interest rates, noting that prior to 2008 rates were managed while paying zero on overnight funds, and called for the Federal Reserve to seek congressional authorization if additional emergency authorities are needed. The remarks also pointed to banking-sector profitability of about USD 270 billion “last year” and referenced compensation levels for large-bank chief executives. She urged a “Yes” vote on “Paul 3761” and described the vote as the start of a bipartisan effort to get the proposal signed into law.
U.S. Senate Committee on Banking, Housing and Urban Affairs 2025-10-09
U.S. Senate Committee on Banking, Housing and Urban Affairs' Warren urges Senate to ban Federal Reserve interest payments to banks and shadow banks
The U.S. Senate Committee on Banking, Housing and Urban Affairs released remarks from Ranking Member Elizabeth Warren supporting Senator Rand Paul’s amendment to stop the Federal Reserve from paying interest on overnight funds deposited by banks and shadow banks. Warren criticized this policy as a subsidy to large financial institutions, noting USD 785 billion paid since 2008, and questioned its necessity for managing interest rates. She urged a bipartisan effort to pass the amendment, emphasizing the need for congressional authorization for any additional emergency powers.