Bringing the Discount Window into the 21st Century Act
Officially: “Bringing the Discount Window into the 21st Century Act” Read the full text
What it does
Read it in plain language
1Short title
This section would let the Act be cited as the "Bringing the Discount Window into the 21st Century Act."
Show official text
1. Short title This Act may be cited as the Bringing the Discount Window into the 21st Century Act .
2Review of discount window operations
This section would amend Section 10 of the Federal Reserve Act. It would renumber the Act's existing paragraph (12) as paragraph (11), and it would add a new paragraph (12) that sets up a review of the Federal Reserve banks' discount window lending programs. Within 60 days after enactment the Board of Governors of the Federal Reserve System would have to start that review, and it would have to finish the review within 240 days after enactment. The review would have to look at: how effective the discount window is at providing liquidity to financial institutions, including during times of financial stress; whether the technology and communications infrastructure is good enough to provide liquidity promptly, including during financial stress; how effective the discount window's cybersecurity measures are; how effective communication is between Federal reserve banks about discount window operations; how effective the Board of Governors' oversight of the discount window is; how the discount window interacts with other sources of liquidity, including the Federal Home Loan Banks, both in normal times and in times of financial distress; and how effective the discount window's current operating hours are and whether those hours should be expanded, taking into account how discount window hours interact with the operating hours of Board and Federal reserve bank payment systems such as FedWire and FedNow. While conducting the review, the Board would have to give the public a chance to comment on how well the discount window works and to suggest improvements. After finishing the review and considering any public comments, the Board would have to write, and approve by a Board vote, a remediation plan to fix any problems found or to make the discount window work better. That plan would have to identify the actions the Board will take to fix the problems, set timelines and milestones for carrying out the plan and ways to show the Board is keeping the improvements in place going forward, and set out ways to manage and control the problems until the plan is fully carried out. Within 365 days after enactment, the Board, after a Board vote approving it, would have to send a report to the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs Committee containing the review's findings and the remediation plan. Before sending that report, the Board would have to give a copy of the draft report to the Comptroller General of the United States and to the Inspector General for the Board of Governors and the Consumer Financial Protection Bureau, and give them a chance to give feedback on it. The Chairman of the Board of Governors would have to testify before those same two committees about the report's contents. The Board would also have to submit an annual report to those two committees reviewing how effective discount window operations are, and the Inspector General for the Board and the Consumer Financial Protection Bureau would have to submit its own annual report to those two committees on the Board's progress carrying out the remediation plan. Any report required under this new paragraph could include a confidential annex covering cybersecurity problems or other problems that could cause financial instability if made public.
Show official text
2. Review of discount window operations Section 10 of the Federal Reserve Act ( 12 U.S.C. 241 et seq. ) is amended— (1) by redesignating paragraph (12) as paragraph (11); and (2) by adding at the end the following: (12) Review of discount window operations (A) In general Not later than 60 days after the date of enactment of this paragraph, the Board of Governors shall commence a review of the discount window lending programs of the Federal reserve banks (the discount window ), and shall complete such review not later than 240 days after the date of enactment of this paragraph. (B) Contents The review required by subparagraph (A) shall include a consideration of— (i) the effectiveness of the discount window in providing liquidity to financial institutions, including in times of financial stress; (ii) whether the technology infrastructure, including means of communications, are sufficient to support the timely provision of liquidity, including in times of financial stress; (iii) the effectiveness of cybersecurity measures; (iv) the effectiveness of communications between Federal reserve banks regarding discount window operations; (v) the effectiveness of the Board of Governors in providing oversight of the discount window; (vi) how the discount window interacts with other providers of liquidity, including the Federal Home Loan Banks, during both normal operations and times of financial distress; and (vii) the effectiveness of existing discount window operating hours and whether such hours should be expanded, taking into account the interaction between discount window operating hours and the operating hours of payment systems of the Board of Governors and Federal reserve banks, such as FedWire and FedNow. (C) Public comment In carrying out the review required by subparagraph (A), the Board of Governors shall provide the public with an opportunity to comment on the effectiveness of discount window operations and to offer suggestions for improving operations. (D) Remediation plan After completing the review required by subparagraph (A) and considering any public comments received pursuant to subparagraph (C), the Board of Governors shall develop, and approve by a vote of the Board of Governors, a written plan to remediate any identified deficiencies or areas for enhancing effectiveness of the discount window, which shall include— (i) an identification of actions that the Board of Governors will take to remediate those deficiencies; (ii) timelines and milestones for implementing the plan and measures to demonstrate how the Board of Governors will maintain implemented improvements on an ongoing basis; and (iii) measures of managing and controlling deficiencies until the plan is implemented in full. (E) Report to Congress on review and plan (i) In general Not later than 365 days after the date of enactment of this paragraph, the Board of Governors shall, after approval by a vote of the Board of Governors, submit a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate containing— (I) the findings of the review required by subparagraph (A); and (II) the remediation plan required by subparagraph (D). (ii) Consultation Before submitting the report required by clause (i), the Board of Governors shall— (I) provide a copy of the proposed report to the Comptroller General of the United States and the Inspector General of the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection; and (II) provide the Comptroller General and Inspector General with an opportunity to provide feedback on the report. (iii) Testimony The Chairman of the Board of Governors shall testify before the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate with respect to the contents of the report required under this subparagraph. (F) Annual reports to Congress (i) Reports by the Board The Board of Governors shall submit an annual report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate containing a review of the effectiveness of discount window operations. (ii) Reports by the Inspector General The Inspector General of the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection shall submit an annual report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate containing a report on the progress of the Board of Governors in implementing the remediation plan required by subparagraph (D). (G) Confidential report information Any report required under this paragraph may contain a confidential annex containing information that details any cybersecurity deficiencies or any deficiencies which, if made public, could cause financial instability. .
Where it is
In the House.