Warner introduces legislation to modernize federal reserve discount window, restore intended use
In the wake of multiple bank failures in 2023, including the collapse of
"The failures of
The Discount Window Enhancement Act of 2024 will:
Mandate Testing of the Discount Window: Mandates that eligible depository institutions operating in
"The Federal Reserve Discount Window is a critical tool that gives financial institutions of all sizes access to liquidity and prevents panic in the broader financial system. Stigma associated with accessing the window and some legacy operational issues have limited the power of this tool and forced the Fed to take dramatic steps to meet recent needs. This legislation would help modernize the window to ensure immediate access by all eligible institutions in today's lightning-fast financial system,"said
"As evident from events in
"
"We thank
"The 2023 banking crisis and the 2020 COVID crisis each revealed vulnerabilities in the current design of the discount window. The events of
"This bill raises the bar on discount window effectiveness for bank, regulator, and (importantly) supervisor alike; it addresses several operational issues and sources of stigma. The bill makes clear that the default supervisory assumption should no longer be to assign zero value to the approximately
A copy of the legislation is available here. A one-pager of the legislation is available here.
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