Bringing the Discount Window Into the 21st Century Act
Floor Speech
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Mr. HILL of Arkansas. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3390) to amend the Federal Reserve Act to require the Board of Governors of the Federal Reserve System to carry out a review of discount window operations and to implement improvements to such operations, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows: H.R. 3390
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.
This Act may be cited as the ``Bringing the Discount Window into the 21st Century Act''. SEC. 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 implemented with respect to discount window operations;
``(iv) the effectiveness of communications between Federal reserve banks, financial institutions, the Board of Governors, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, and the Secretary of the Treasury regarding discount window operations;
``(v) the effectiveness of the Board of Governors in providing oversight of the discount window and in ensuring consistent access to the discount window across the Federal Reserve System;
``(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;
``(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 Federal reserve banks, such as the Fedwire Funds Service and FedNow Service;
``(viii) the impact of mobile banking and instant communications technology on depositor behavior and liquidity risk posed to financial institutions, including how the discount window can--
``(I) help financial institutions better respond to rapid liquidity shortfalls; and
``(II) prevent broader financial instability; and
``(ix) the effectiveness of the discount window in light of the stigma associated with its usage, ways to reduce such stigma, and ways to improve access, operational efficiency, transparency, and timeliness of the process for financial institutions seeking advances, including on the pricing and other terms of such advances.
``(C) Remediation plan.--After the Board of Governors completes the review required by subparagraph (A), the Board of Governors, in consultation with the Federal reserve banks, shall--
``(i) identify deficiencies with the discount window and areas for enhancing discount window effectiveness; and
``(ii) develop a written plan to remediate the identified deficiencies and implement the identified enhancements, which shall include--
``(I) an identification of actions that will be taken to enhance discount window effectiveness and remediate identified deficiencies;
``(II) timelines and milestones for implementing the plan and measures to demonstrate how the implemented improvements will be maintained on an ongoing basis; and
``(III) measures of managing and controlling any deficiencies and current operations until the plan is implemented in full.
``(D) 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 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 (C).
``(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 of the Currency, the Federal Deposit Insurance Corporation, and the Secretary of the Treasury; and
``(II) provide the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Secretary of the Treasury with an opportunity to provide feedback on the report.
``(iii) Testimony.--The Chairman of the Board of Governors shall, at the semi-annual hearing required under section 2B, testify with respect to the contents of the report required under this subparagraph.
``(E) 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 and a progress report on the actions taken to implement the identified enhancements described in subparagraph (C).
``(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 (C).
``(F) Confidential report information.--Any report required under this paragraph may contain a confidential annex containing information that, if made public, could--
``(i) impact monetary policy, financial stability, or cybersecurity; or
``(ii) significantly endanger the financial stability of any financial institution.
``(G) Repeal.--This paragraph shall be repealed on the date on which the Board of Governors notifies the Congress and publishes on a public website of the Board of Governors that the remediation plan required under subparagraph (C) has been fully implemented.''.
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Mr. HILL of Arkansas. I rise today in support of Ms. De La Cruz's bill, the Bringing the Discount Window into the 21st Century Act.
It is critical that our banks have the ability to have emergency liquidity in the case of a crisis or having liquidity intraday in the banking day without a stigma. These are challenges. They were challenges before the financial crisis, but it continues today.
This bill allows banks to keep credit flowing through the economy while reducing risks that a panic-induced bank run would lead to unnecessary bank failures.
The discount window has been underused and burdened by operational difficulties and stigma. We have seen that on this House floor in our economy, most recently in the failures of Silicon Valley Bank and Signature Bank in the spring of 2023, where fear of a market reaction and outdated technology delayed the use of the discount window when it was needed most.
It is critical that the Federal Reserve learn from these mistakes of the past and allow the discount window to fulfill its role as the primary tool for stabilizing the financial system in a time of stress.
Representative De La Cruz's bipartisan bill would do just that by directing the Fed to conduct a review of the discount window, submit a plan to Congress with concrete, actionable reforms, and then provide regular updates on its implementation.
For example, H.R. 3390 explicitly directs the Federal Reserve to evaluate whether extending operating hours and improving technology would make the discount window more accessible and thereby more effective. In requiring the Fed to make changes based on these findings, H.R. 3390 goes beyond a study bill and would meaningfully address deficiencies that would make the American financial system stronger and more stable.
Mr. Speaker, I thank the gentlewoman from south Texas (Ms. De La Cruz) for her leadership on this important issue to make sure the Fed is ready and the discount window use is appropriate for the 21st century, where money now moves, Mr. Speaker, at the press of a button.
Mr. Speaker, I urge my colleagues to support this bill, and I reserve the balance of my time.
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Mr. HILL of Arkansas. Mr. Speaker, I include in the Record the CBO estimate for this bill. EFFECTS ON DIRECT SPENDING AND REVENUES OF LEGISLATION CONSIDERED UNDER SUSPENSION OF THE RULES IN THE HOUSE OF REPRESENTATIVES WEEK OF FEBRUARY 9, 2026 ---------------------------------------------------------------------------------------------------------------- Additional Information on Bill Number Title Effect on Direct Effect on Revenues Direct Spending Spending and Revenue Effects ---------------------------------------------------------------------------------------------------------------- H.R. 3390....................... Bringing the None.............. Reduce by at Least Would increase Discount Window $500K. deficits by more into the 21st than $500K. Century Act, as amended. ---------------------------------------------------------------------------------------------------------------- Source: Congressional Budget Office.
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Mr. HILL of Arkansas. De La Cruz), the author of this important legislation.
Ms. De La CRUZ. Mr. Speaker, I thank Chairman Hill for yielding.
Mr. Speaker, today, I rise in support of my bill, H.R. 3390, the Bringing the Discount Window into the 21st Century Act of 2025, which has received broad bipartisan support in the Financial Services Committee.
H.R. 3390 addresses needed improvements for the Federal Reserve's discount window operations and technology to ensure it is better equipped to serve depository institutions, including community banks, which strengthens the resiliency of our U.S. financial system.
The Federal Reserve's important role as the lender of last resort is supported by the Fed's discount window. In times when depository institutions need liquidity, they can rely on the discount window to fulfill short-term liquidity needs by pledging high-quality collateral such as U.S. Treasuries in return for cash.
Unfortunately, as we saw most recently in the 2023 bank failures, stigma remains, which can cause the discount window to be underused or banks to delay accessing it for fear of market reactions.
Bringing the Discount Window into the 21st Century Act ensures that Congress acts on the bipartisan consensus to modernize the Federal Reserve's discount window operations and reduce the stigma of accessing it.
H.R. 3390 does so by requiring the Federal Reserve to conduct a review of the discount window to identify deficiencies and develop a remediation plan. This review will identify improvements in all aspects of discount window operations, including technology, operating hours, stigma, and interaction with other providers of liquidity, including the Federal Home Loan Banks, during both normal operations and times of financial stress.
By improving efficiencies in the U.S. banking system, we are ensuring homeowners, small businesses, and farmers can access capital from their financial institutions when they need it most.
Mr. Speaker, I urge my colleagues to join me in support of H.R. 3390.
Mr. Speaker, I thank the gentlewoman from south Texas for advancing this bill. I thank the minority's consistent work to make sure that this is a bill that will substantially direct the Federal Reserve to make sure our discount window is effective and used by our financial institutions to enhance financial stability.
Mr. Speaker, I urge both sides of the aisle to vote ``yes,'' and I yield back the balance of my time.
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