Bringing the Discount Window into the 21st Century Act

The bill would amend the Federal Reserve Act to require the Board of Governors of the Federal Reserve System to launch a review of discount window lending operations within 60 days of enactment and complete it within 240 days. The review must examine the discount window's technology infrastructure, cybersecurity measures, operating hours, coordination with other liquidity providers such as the Federal Home Loan Banks, the impact of mobile banking and instant communications on depositor behavior, and the stigma associated with borrowing from the discount window. After the review, the Board would be required to develop a written remediation plan — with specific timelines and milestones — addressing identified deficiencies and improvements.

Within 365 days of enactment, the Board would submit a report to designated congressional committees containing both the review findings and the remediation plan. The Board and the Inspector General would each submit separate annual reports to Congress on implementation progress. All provisions would be automatically repealed once the Board notifies Congress and publicly posts that the remediation plan has been fully implemented.

The Board of Governors of the Federal Reserve System and the 12 Federal Reserve Banks, which would carry out the review and implement the remediation plan. Depository institutions — commercial banks, savings institutions, and credit unions — that use or could use the discount window for short-term liquidity would be the primary downstream beneficiaries. The Comptroller of the Currency, the FDIC, and the Treasury Secretary would be consulted on the initial report.

If enacted, banks facing sudden liquidity shortfalls — the kind that can accelerate into bank runs in an era of mobile banking and instant transfers — could have access to a faster, more reliable, and less stigmatized discount window. For regulators, the mandated review and annual reporting would create an ongoing accountability mechanism and public record of whether the Fed is closing operational gaps in a critical financial backstop.

The Board of Governors would commence the review within 60 days of enactment, consulting with Federal Reserve Banks, and complete it within 240 days. After the review, the Board and Federal Reserve Banks would jointly develop the written remediation plan. Before submitting the first congressional report (due within 365 days), the Board must share a draft with the Comptroller of the Currency, FDIC, and Treasury Secretary and allow them to provide feedback. The Fed Chair must testify on the report at the next semi-annual congressional hearing. Thereafter, both the Board and its Inspector General submit separate annual progress reports to Congress. The entire statutory framework self-repeals upon full implementation of the remediation plan.