Small business owners grasp accountability. If they take out a loan, they must pay it back. If they spend money to expand and invest, there has to be a return on that investment. And if they mismanage their resources or make poor financial decisions that prevent them from paying bills or employees, very likely they will end up shutting their doors.
Government agencies and entities seem to play by different rules. The Federal Reserve is case in point.
FedNow is the Fed’s recently launched real-time payments system, despite the fact that a private market solution has existed since 2017.
FedNow has become an expensive government experiment that unnecessarily drains taxpayer money and shows no clear plan for accountability.
The Fed has already poured $545 million in startup costs into FedNow, according to its own disclosures. On top of that, hundreds of millions in operating expenses have been required over the past two years just to keep the system running — with virtually no revenue to cover these costs. That’s nearly $1 billion in taxpayer-backed spending on a program that the private sector is already providing more efficiently and effectively.
Even more troubling, under the Monetary Control Act, the Fed is legally obligated to recover these costs over the long term. Yet there is no serious plan — or prospect — for doing so. In the small business world, that is unacceptable. For the Fed, it seems to be business as usual.
Unfortunately, FedNow is not the only example of mismanagement. The Federal Reserve’s long-planned renovation of its Washington, D.C. headquarters has now ballooned into a $2.5 billion project, sparking bipartisan criticism and turning into a political flashpoint. What was once expected to be a modest update to the building has morphed into one of the most expensive federal office renovations in history. As costs spiral upward, taxpayers and policymakers are right to ask: if the Fed cannot competently oversee its own construction project, how can it credibly oversee a system like FedNow?
These examples suggest a pattern. The Fed is increasingly operating with little discipline, little transparency, and little regard for its legal or fiscal obligations. Meanwhile, its core mission — ensuring price stability and sound monetary policy — has taken a back seat. Entrepreneurs are already contending with high borrowing costs, cumulative inflationary costs, and a less-than-clear economic outlook. They don’t need a central bank distracted by billion-dollar side projects and vanity undertakings.
Congress and policymakers must step in. More oversight of the Federal Reserve is urgently needed — not only to rein in spending, but to ensure its decisions don’t stifle the private innovation and entrepreneurship that drive America’s economy. A central bank with sweeping authority over our financial system cannot be allowed to spend nearly a billion dollars on a duplicative payment service, or billions more on a headquarters renovation, without a credible plan to recover costs and justify expenses.
It’s time for lawmakers to insist on transparency and discipline from the Federal Reserve. Our economy, and the small businesses that are its backbone, can’t afford to continue underwriting the Fed’s mismanagement and mission creep. Instead, we need a central bank that is focused on its core mission of monetary stability.
Karen Kerrigan is President & CEO of the Small Business & Entrepreneurship Council (SBE Council), a nonprofit advocacy, research and education organization dedicated to promoting entrepreneurship and protecting small business.
