Summary of HR 3390: Bringing the Discount Window into the 21st Century Act

Purpose and Intent

The Bringing the Discount Window into the 21st Century Act (HR 3390) aims to modernize the operations of the Federal Reserve's discount window, which provides liquidity to financial institutions. The bill mandates a comprehensive review of the discount window's effectiveness, technology, and operational efficiency, particularly during financial stress.

Key Provisions

The bill includes several significant provisions:

1. Review of Discount Window Operations:

   • The Board of Governors of the Federal Reserve must initiate a review of discount window lending programs within 60 days of enactment and complete it within 240 days.
   • The review will assess:
     • Effectiveness in providing liquidity during financial stress.
     • Adequacy of technology and communication infrastructure.
     • Cybersecurity measures.
     • Oversight effectiveness by the Board of Governors.
     • Interaction with other liquidity providers.
     • Operating hours and their alignment with payment systems.
     • Impact of mobile banking on liquidity risk.
     • Stigma associated with using the discount window and ways to improve access and efficiency.

2. Remediation Plan:

   • Following the review, the Board must identify deficiencies and develop a remediation plan that includes:
     • Actions to enhance effectiveness.
     • Timelines and milestones for implementation.
     • Ongoing maintenance measures.

3. Reporting Requirements:

   • A report detailing the findings of the review and the remediation plan must be submitted to Congress within 365 days of enactment.
   • The Board must consult with key financial regulatory bodies before finalizing the report and provide testimony during semi-annual hearings.

4. Annual Reports:

   • The Board is required to submit annual reports to Congress on the status of the discount window and any improvements made.

Impact

The bill is expected to affect:
- Financial Institutions: Improved access to liquidity and operational efficiency during times of financial stress.
- Regulatory Bodies: Enhanced oversight and communication among the Federal Reserve, FDIC, and Treasury.
- Consumers: Potentially more stable financial systems that can better withstand liquidity crises.

Procedural Timeline

• Introduced: May 14, 2025
• Reported (Amended): September 4, 2025
• Committee Consideration: Mark-up session held on July 23, 2025, with a vote of 48-1 in favor of reporting the bill.
• Next Steps: The bill is now placed on the Union Calendar for further consideration.

Conclusion

HR 3390 seeks to enhance the Federal Reserve's discount window operations through a structured review and improvement plan, ultimately aiming to bolster the resilience of the financial system in the 21st century.