H.R. 3390: Bringing the Discount Window into the 21st Century Act

This bill, titled the Bringing the Discount Window into the 21st Century Act, aims to modernize and enhance the operations of the discount window, which is a mechanism used by the Federal Reserve to provide liquidity to financial institutions in times of need. Here is what the bill proposes:

Review of Discount Window Operations

The bill mandates a comprehensive review of the discount window lending programs by the Board of Governors of the Federal Reserve System. This review must start within 60 days of the bill being enacted and be completed within 240 days. Key aspects of the review include:

• The effectiveness of the discount window in providing liquidity, especially during financial stress.
• An assessment of the technology and communication infrastructure necessary for timely liquidity provision.
• An evaluation of cybersecurity measures in place.
• The effectiveness of communication between Federal Reserve banks regarding discount window operations.
• The oversight abilities of the Board of Governors over the discount window.
• The interaction of the discount window with other liquidity providers, like Federal Home Loan Banks.
• A review of existing operating hours and a consideration of whether they should be expanded to better align with payment systems.

Public Participation

The Board of Governors is required to offer the public a chance to comment on the effectiveness of the discount window operations and suggest improvements during the review process.

Remediation Plan

Upon completing the review, the Board must develop a written plan to address any deficiencies identified, which will include:

• Actions to remediate deficiencies.
• Timelines and milestones for implementing the changes.
• Measures to control and manage any deficiencies until the plan is fully implemented.

Reporting Requirements

The Board of Governors must submit a report to Congress within 365 days of the enactment of the bill. This report must detail the findings of the review and outline the remediation plan. The Board will also need to consult with various oversight bodies before finalizing this report.

Additionally, annual reports will be required to update Congress on the effectiveness of discount window operations and the progress in implementing the remediation plan.

Confidential Information

The reports may contain confidential annexes detailing any cybersecurity issues or other sensitive information that could affect financial stability if disclosed publicly.

Relevant Companies

• JPM (JPMorgan Chase & Co.) - As a major financial institution, changes to discount window operations may directly impact its liquidity management and borrowing strategies.
• BAC (Bank of America Corp.) - Like JPMorgan, Bank of America’s access to liquidity through the discount window could be affected by any changes in its operating hours or technology enhancements.
• GS (Goldman Sachs Group, Inc.) - Goldman Sachs may also experience effects related to the proposed improvements in discount window capabilities, particularly during financial stresses.