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.

Bill: 118-hr-3242
Sponsor: full_name: Rep. Luetkemeyer, Blaine [R-MO-3]
Introduced: 2023-05-11
Policy area: Finance and Financial Sector
Latest action: action_date: 2023-05-11
text: Referred to the House Committee on Financial Services.

Summaries:
action_date: 2023-05-11
action_desc: Introduced in House
text: <p>This bill establishes the Bank Term Funding Program, which allows a Federal Reserve bank to make advances to depository institutions that pledge certain collateral fully guaranteed by the United States. An advance must be made available with a term of up to one year.</p>

tv_txt: I 118th CONGRESS 1st Session H. R. 3242 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.

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: 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). .