II 

118TH CONGRESS 

2D SESSION S. 4799 

To amend the Federal Reserve Act to mandate discount window testing, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 25, 2024 

Mr. WARNER introduced the following bill; which was read twice and referred 

to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To amend the Federal Reserve Act to mandate discount 

window testing, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Discount Window En5 hancement Act of 2024’’. 

6 SEC. 2. DEMONSTRATION OF ABILITY TO USE THE DIS7 COUNT WINDOW. 

8 (a) IN GENERAL.—Section 10B of the Federal Re9 serve Act (12 U.S.C. 347b) is amended by adding at the 

10 end the following: 


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1 ‘‘(c) REQUIREMENT FOR DEPOSITORY INSTITUTIONS

2 TO DEMONSTRATE ABILITY TO SEEK ADVANCES.— 

3 ‘‘(1) DEFINITIONS.—In this subsection: 

4 ‘‘(A) APPROPRIATE CONGRESSIONAL COM5 MITTEES.—The term ‘appropriate congressional 

6 committees’ means the Committee on Banking, 

7 Housing, and Urban Affairs of the Senate and 

8 the Committee on Financial Services of the 

9 House of Representatives. 

10 ‘‘(B) DEPOSITORY INSTITUTION.—The 

11 term ‘depository institution’ means— 

12 ‘‘(i) any institution the deposits of 

13 which are insured under the Federal De14 posit Insurance Act (12 U.S.C. 1811 et 

15 seq.); or 

16 ‘‘(ii) an insured credit union, as de17 fined in section 101 of the Federal Credit 

18 Union Act (12 U.S.C. 1752). 

19 ‘‘(2) REQUIREMENTS.—Not later than 1 year 

20 after the date of enactment of this subsection, any 

21 depository institution operating in the United States 

22 that is eligible to seek advances under this section 

23 shall, pursuant to regulations promulgated under 

24 this subsection, conduct testing of such advances 

25 and demonstrate, to the satisfaction of the Federal 


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1 reserve bank at which the depository institution 

2 maintains an account, or at which another deposi3 tory institution maintains an account on its behalf, 

4 and to the primary Federal regulator of the deposi5 tory institution, that— 

6 ‘‘(A) the depository institution has, and 

7 maintains on an ongoing basis, all operational 

8 and technical capacities necessary to borrow ad9 vances in a timely and efficient manner; as 

10 demonstrated by such required testing; and 

11 ‘‘(B) the depository institution maintains 

12 collateral with the Federal reserve bank of 

13 which it is a member to support borrowing in 

14 accordance with the requirements of this sub15 section. 

16 ‘‘(3) REGULATIONS.—Not later than 180 days 

17 after the date of enactment of this subsection, the 

18 Board, the Federal Deposit Insurance Corporation, 

19 the Office of the Comptroller of the Currency, and 

20 the National Credit Union Administration shall pro21 mulgate final regulations implementing the require22 ments under paragraph (2), including: 

23 ‘‘(A) ASSET THRESHOLDS FOR TESTING

24 REQUIREMENTS.— 


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1 ‘‘(i) LARGER INSTITUTIONS.—For de2 pository institutions having assets greater 

3 than $100,000,000,000, mandatory testing 

4 shall be required not less frequently than 

5 quarterly, on a schedule determined by the 

6 Board. 

7 ‘‘(ii) SMALLER INSTITUTIONS.—For 

8 depository institutions having assets not 

9 less than $10,000,000,000 and not greater 

10 than $100,000,000,000, mandatory testing 

11 shall be required not less frequently than 

12 semiannually. 

13 ‘‘(B) VARIATION OF THE SCHEDULE, SIZE, 

14 AND TENOR OF ADVANCES.—The regulations 

15 promulgated under this paragraph may provide 

16 for Federal reserve banks to vary the size, 

17 tenor, and timing of advances required under 

18 this section if the Board determines that— 

19 ‘‘(i) such variations would be effective, 

20 particularly with respect to reducing stig21 ma associated with advances under this 

22 section; and 

23 ‘‘(ii) after consultation with affected 

24 depository institutions, such variations 


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1 would not result in undue added oper2 ational burdens or costs. 

3 ‘‘(C) INCORPORATION OF MANDATORY

4 TESTING INTO SUPERVISION.—The regulations 

5 promulgated under this paragraph shall require 

6 that each of the Board, the Federal Deposit In7 surance Corporation, the Office of the Comp8 troller of the Currency, and the National Credit 

9 Union Administration— 

10 ‘‘(i) incorporate an assessment of the 

11 readiness of each depository institution to 

12 seek advances under this section into the 

13 examination activities of the agency with 

14 regard to liquidity risk management of the 

15 depository institution; 

16 ‘‘(ii) provide that the regulations and 

17 supervisory standards of the agency with 

18 regard to liquidity provisioning shall give 

19 appropriate, positive consideration to— 

20 ‘‘(I) the ability of a depository in21 stitution to meet the requirements of 

22 the regulations promulgated under 

23 this paragraph; and 

24 ‘‘(II) the ability of the depository 

25 institution to access liquidity through 


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1 advances under this section, including 

2 the pre-pledged collateral of the de3 pository institution. 

4 ‘‘(D) REPORTING REQUIREMENTS FOR DE5 POSITORY INSTITUTIONS.—The regulations pro6 mulgated under this paragraph shall require 

7 that— 

8 ‘‘(i) the management of each deposi9 tory institution eligible to seek an advance 

10 under this section shall establish, and the 

11 risk committee or equivalent body of the 

12 board of directors of the depository institu13 tion shall review and approve, not less fre14 quently than annually, the liquidity risk 

15 management plans and operational readi16 ness of the depository institution to exe17 cute such plans, including detailed policies 

18 and procedures for seeking advances under 

19 this section; and 

20 ‘‘(ii) once approved, the management 

21 described in paragraph (A) shall submit to 

22 the Board, the Federal reserve bank of 

23 which the depository institution is a mem24 ber, and the primary Federal supervisor of 

25 the depository institution, a report detailVerDate Sep 11 2014 21:48 Aug 22, 2024 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4799.IS S4799

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1 ing the findings of the reviews required 

2 under that subparagraph. 

3 ‘‘(4) MANDATORY IMPROVEMENTS TO OPER4 ATIONS.—Not later than 180 days after the date of 

5 enactment of this subsection, the Board and the 

6 Federal reserve banks shall implement improvements 

7 to advances under this section to ensure that deposi8 tory institutions are able to access advances rapidly 

9 as needed, including— 

10 ‘‘(A) changes to operations for advances 

11 under this section and Federal Reserve pay12 ment services to ensure that a depository insti13 tution eligible to obtain advances under this 

14 section is able to obtain such advances until at 

15 least 8 p.m. each day in each relevant United 

16 States time zone; 

17 ‘‘(B) implementing a secure, computer18 based online access platform that depository in19 stitutions may use to obtain such advances, in20 cluding automating the process of primary cred21 it approval if appropriate collateral is pledged; 

22 ‘‘(C) standardizing technical specifications 

23 and operational procedures for such advances 

24 across all Federal reserve banks; 


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1 ‘‘(D) implementing procedures for the con2 sistent and efficient identification, assignment, 

3 and transfer of security interests in collateral 

4 that is pledged to secure borrowing between any 

5 Federal Home Loan Bank and any Federal re6 serve bank; 

7 ‘‘(E) implementing simplified procedures 

8 for depository institutions to pledge small busi9 ness loans as collateral for advances under this 

10 section, with emphasis on simplified documenta11 tion for smaller institutions; and 

12 ‘‘(F) creating and funding an outreach 

13 program to provide information and technical 

14 assistance to smaller institutions with regard to 

15 accessing advances under this section. 

16 ‘‘(5) HARMONIZATION.—Not later than 270 

17 days after the date of enactment of this subsection, 

18 the Board, in consultation with the Federal Housing 

19 Finance Administration and the Federal Home Loan 

20 Banks, shall promulgate regulations or guidance 

21 simplifying and harmonizing, to the greatest extent 

22 practicable, policies and procedures for the pledging 

23 of collateral for advances under this section, includ24 ing for the timely and efficient transfer of collateral 


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1 between Federal Home Loan Banks and Federal re2 serve banks. 

3 ‘‘(6) FEDERAL RESERVE REPORTING.— 

4 ‘‘(A) REVIEW.—Not later than 270 days 

5 after the date of enactment of this subsection, 

6 the Board shall comprehensively review the 

7 weekly reporting of its balance sheet, including 

8 advances under this section, and consider 

9 changes to reduce the risk of market distortions 

10 caused by speculative activity regarding such 

11 advances, giving particular consideration to— 

12 ‘‘(i) the breakdown of balance sheet 

13 data by district and the manner in which 

14 such reporting may contribute to specula15 tive activity that threatens the stability of 

16 individual depository institutions; and 

17 ‘‘(ii) the effects of disclosure require18 ments described in section 11(s). 

19 ‘‘(B) REVISED REPORTING METHOD20 OLOGY.—Not later than 90 days after the date 

21 on which the review required under subpara22 graph (A) is completed, the Board shall revise 

23 reporting policies as appropriate to address the 

24 findings of such review, and if necessary make 

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1 sional committees regarding potential statutory 

2 changes. 

3 ‘‘(7) STUDY.—Not later than 1 year after the 

4 date of enactment of this subsection, the Board, in 

5 consultation with the Comptroller of the Currency, 

6 the Federal Deposit Insurance Corporation, and the 

7 National Credit Union Administration, shall com8 plete a study and submit to the appropriate congres9 sional committees a report on additional measures 

10 that could be undertaken to reduce the stigma and 

11 otherwise improve the process for advances under 

12 this section, including— 

13 ‘‘(A) the pricing and other terms of such 

14 advances, especially as they compare to alter15 native liquidity sources; 

16 ‘‘(B) the costs and benefits of any other 

17 relevant operational or policy changes; and 

18 ‘‘(C) recommendations to the appropriate 

19 congressional committees regarding any statu20 tory changes necessary to reduce the stigma as21 sociated with, and otherwise improve the proc22 ess for, such advances.’’. 

Æ 


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