H.R. 2418: Federal Reserve Regulatory Oversight Act

This bill, known as the Federal Reserve Regulatory Oversight Act, aims to change how the Federal Reserve (the central bank of the United States) manages its non-monetary policy related expenses. Here’s a breakdown of what the bill proposes:

Bringing Administrative Costs into the Appropriations Process

The bill stipulates that the Federal Reserve's board and its banks will need to follow new rules regarding the funding of their non-monetary policy related administrative costs. These costs include expenses related to regulatory activities that are not connected to monetary policy, such as:

• Supervising and regulating financial entities.
• Conducting examinations and stress tests on these entities.
• Communicating with banks and other institutions about supervisory matters and regulatory laws.
• Training staff involved in supervisory functions.
• Processing regulatory reports submitted by the institutions under its supervision.
• General overhead and support costs related to these activities.

Cost Recovery Through Assessments and Fees

To fund these activities, the Federal Reserve will be authorized to collect fees and assessments. The bill requires that:

• The Federal Reserve must collect enough fees to cover the costs of its annual appropriation from Congress.
• Only funds that are approved in advance by Congress can be collected for these activities.
• All fees collected must be deposited into the appropriations account designated for the Federal Reserve.

Limitations

It is important to note that this bill specifically applies to non-monetary policy administrative costs. Monetary policy expenditures will continue to be governed under existing regulations.

Effective Date

The changes proposed in this bill are set to take effect beginning on October 1, 2025, which means that any expenses or fees related to the new rules will be applicable from that date onward.

Relevant Companies

• JPM - JPMorgan Chase & Co.: As a major banking institution, JPMorgan may be impacted by increased regulatory fees and supervisory assessments imposed by the Federal Reserve due to the bill's requirements.
• BAC - Bank of America Corporation: Similarly, Bank of America, being under the Federal Reserve's oversight, could see changes in how regulatory costs are managed and allocated.
• WFC - Wells Fargo & Company: Wells Fargo may also be affected by potential changes in the cost structure associated with regulatory compliance and oversight as brought about by this legislation.