To amend the Federal Reserve Act to establish a permanent Bank Term Funding Program to provide member banks and other depository institutions with short-term liquidity against long-term assets.

Subjects: Finance and Financial Sector


<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3242 Introduced in House (IH)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                H. R. 3242

  To amend the Federal Reserve Act to establish a permanent Bank Term 
     Funding Program to provide member banks and other depository 
    institutions with short-term liquidity against long-term assets.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 11, 2023

 Mr. Luetkemeyer introduced the following bill; which was referred to 
                  the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
  To amend the Federal Reserve Act to establish a permanent Bank Term 
     Funding Program to provide member banks and other depository 
    institutions with short-term liquidity against long-term assets.

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

SECTION 1. FEDERAL RESERVE BANK TERM FUNDING PROGRAM.

    The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended by 
inserting after section 10B the following:

``SEC. 10C. BANK TERM FUNDING PROGRAM.

    ``(a) In General.--There is established a Bank Term Funding 
Program, under which a Federal reserve bank may, subject to rules 
established by the Board of Governors of the Federal Reserve System, 
make advances to eligible borrowers, subject to eligible collateral 
pledged by an eligible borrower.
    ``(b) Program Requirements.--In making advances under the Bank Term 
Funding Program--
            ``(1) advances may only be made in an amount up to the 
        amount of the eligible collateral pledged, but advances shall 
        be made with recourse beyond the pledged collateral;
            ``(2) advances shall be made at a fixed rate equal to the 
        one-year overnight index swap rate plus 10 basis points, as of 
        the day the advance is made;
            ``(3) collateral shall be valued at par value and margin 
        shall be 100 percent of par value;
            ``(4) borrowers shall be allowed to prepay without penalty;
            ``(5) advances shall be made available with a term of up to 
        1 year; and
            ``(6) a Federal reserve bank may not charge the borrower a 
        fee.
    ``(c) Definitions.--In this section:
            ``(1) Eligible borrower.--The term `eligible borrower' 
        means any U.S. federally-insured bank, savings association, or 
        credit union or a U.S. branch or agency of a foreign bank that 
        is eligible for primary credit (as defined under section 
        201.4(a) of title 12, Code of Federal Regulations).
            ``(2) Eligible collateral.--The term `eligible collateral' 
        includes any collateral eligible for purchase by the Federal 
        reserve banks in open market operations (as described under 
        section 201.108(b) of title 12, Code of Federal 
        Regulations).''.
                                 &lt;all&gt;
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