IORB elimination would harm credit unions, U.S. monetary policy
Credit unions strongly oppose any effort that would prohibit the Federal Reserve from paying interest on deposits held at Reserve Banks by depository institutions. America’s Credit Unions SVP of Advocacy Greg Mesack detailed the opposition in a letter sent ahead of a Senate Homeland Security and Government Affairs Committee hearing on oversight of the Fed’s interest on reserve balances (IORB).
“While this effort may be aimed at curtailing the benefits that big banks receive from this interest payment, the real loser here would be credit unions and other community institutions that use these funds to serve their members. Eliminating such payments would have a devastating impact on community financial institutions like credit unions and the communities they serve,” the letter reads.
Credit unions received approximately $6.6 billion from the Fed through its IORB program in 2024. Eliminating IORB could have serious impacts on U.S. monetary policy and could reduce federal revenue, in addition to harming financial institutions.
Committee Chair Rand Paul, R-Ky., has supported efforts to eliminate IORB and unsuccessfully attempted to attach an amendment eliminating it to the Fiscal Year 2026 National Defense Authorization Act. America’s Credit Unions wrote to the Senate on the “devastating impact” this change would have, and the amendment was defeated 14-83.