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Senator Rand Paul has proposals vigorously against interest payment by the Fed on reserves kept by the major banks-those, he assures, don’t need it-so as to bring interest rates down as was promised by President Donald Trump. The End The Fed’s Big Bank Bailout Act, as the proposed bill is called, is a crusade to halt what he asserts is a taxpayer-financed subsidy to a large extent for commercial banks and foreign banks. This announcement certainly makes the debate on interest rates an urgent matter.
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He highlighted the very mechanism behind his proposal in a recent video address. Since 2010, the Fed started paying interest on reserves, and since then some $3 trillion have since been stuffed at the Fed. At over 4 percent at present, this sort of means that about $188 billion in interest payments is flowing to the top five banks in New York; foreign banks take away 40 percent of this, the senator alleged.
“It is a ridiculous idea,” Paul said angrily. “The average taxpayer is paying interest on the national debt and this money are going straight to rich bankers in New York. It ought to just stop now.” He continued, stating that these payments set an artificially high floor for interest rates below which they cannot fall; to do so, banks could readily earn those rates risk-free through the Fed. If they can abolish these payments, it means that a barrier which currently prevents the lowering of borrowing cost for consumers and businesses will be taken down.
The timing of this bill to come about for consideration is also notable, given the pending announcement of the Fed’s latest rate decision. President Trump has expressed several times his interest in seeing rates come down to spur economic growth and reduce interest payments on the huge government debt. The bill presented by Paul seems to be one step further in that regard, though he did warn that ultimately, interest rates are determined by the market and confidence in US fiscal policy.
“The country has no budget,” said Paul. “Republicans and Democrats have failed to put forward a budget, so the markets are worried. They’re very worried.” Then he explained that while matters of short-term rates decided by the Fed are significant, the more substantial issues of fiscal discipline and dollar stability may lead to perversities in the yield curve.
Reactions to Senator Paul have been mixed, highlighting, as such, that far-reaching chasm upon monetary and fiscal policy. Some offered their unqualified support to the initiative: “Glad to see you are working with President Trump,” one user wrote, thus emphasizing the senator’s alliance with the president. Another gave more radical advice: “Rand it’s time to END THE FED!!!!”
However, skepticism and heavy criticism were arrayed against this. One questioned the utility of the proposal: “He’s tried, his colleagues are spineless,” perhaps referring to past occasions in which Paul struggled with political opposition in attempting to gain support. The other went pretty much bitingly as far as calumny: “America burns and you have a hard on for Fauci and a plan that has no chance of getting passed. Thank you for nothing.”
Several comments dwelt upon wider concerns relating to the financial system. One inquired, “So if banks didn’t have the Fed giving them taxpayer funds, could the Fed pretty much close down every Bank in America?” Relates to. Another highlighted the sky-high interest on credit cards, noting that bills to cap it are just sitting on Congress’ shelves while consumers are suffering.
My Big Bank Bailout Act would prevent banks from receiving interest payments from the Fed for not loaning money to Americans. This bill would help achieve President Trump’s goal of bringing interest rates down. pic.twitter.com/hI6FvLAGJI
— Rand Paul (@RandPaul) September 16, 2025
Interestingly, the discussion eventually meandered into historical analogies and cost-benefit analysis. Comments went on to mention: “historical examples of obscure policies contributing to inflation are rare in isolation. This other party apparently referenced the appointment of Arthur Burns as Fed Chair during the infamous 1970s inflation crisis.” Someone pondered whether ending the interest payments might worsen matters if demand outranked supply, while another countered that such a scenario was unlikely in almost all cases.
There were some responses that went far from strict economics. There were a number of those-see also comments about free speech concerns, which relate to dismissals-whooried along these lines. Others moved to question Paul’s media relations as well as his continued preoccupation with the former NIAID director, Anthony Fauci.
But this set of reactions touches the thread of an age-old populist critique of the Fed and big finance. By labeling this as “a taxpayer funded subsidy to wealthy banks” Paul attempts to tap into that general anger regarding economic inequality and the perceived injustices that the economic system represents.
This bill is among a great many policy proposals now circulating-out-of-which Congress faces some seriously dire fiscal challenges and some pressing policy issues that the administration has highlighted in hopes of turning into monetary policy. Whether it gains much momentum is very much up in the air; however, in drawing attention to the Fed and in ways of lowering interest rates, it has certainly added fuel to the fire.
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This sustained push for monetary reform by Senator Paul places these matters ever so strongly in the public mind. While it remains to be seen just how the legislative side plays out, Paul’s strong showing on this issue alongside President Trump ensures that this topic carves itself a place in the wider discourse relating to interest rates and financial regulation, so long as this administration is in power.
This story originally appeared on Celebrityinsider
