WeVote
Log In

Bill

Bill

S 4585

Discount Window Preparedness Act

119th Congress Introduced by John Neely Kennedy and 1 co-sponsor

The act requires depository institutions to prove readiness to borrow from the discount window through mandatory testing and operational upgrades for rapid, stigma-free access.

Introduced in Senate
0
WeVote Research Nonpartisan
Bill Summary · S 4585

Summary of Bill: Discount Window Preparedness Act (S.4585, 119th Congress)

Main purpose

The Discount Window Preparedness Act would amend the Federal Reserve Act to mandate proactive testing and preparedness by depository institutions to access the Fed’s discount window. The goal is to ensure banks and other insured institutions can obtain liquidity advances quickly and with reduced stigma during times of stress.

Key provisions and changes

  • Mandatory testing to seek advances (new subsection 10B(c))

    • Establishes a requirement for every depository institution eligible to seek advances under the discount window to demonstrate readiness to borrow.
    • Testing must show the institution has ongoing operational and technical capacity to obtain advances in a timely and efficient manner, and that it maintains collateral pledged to support borrowing.

  • Regulatory framework and timelines

    • Federal regulators (Board of Governors of the Federal Reserve System, FDIC, OCC, and NCUA) must issue final regulations within 180 days of enactment implementing the testing requirements.
    • Regulations must define asset thresholds and testing schedules, as well as operational standards for discount window access.

  • Asset-based testing schedules (regulations required)

    • Large institutions (assets > $100 billion): mandatory testing at least quarterly.
    • Medium-sized institutions ($10 billion to $100 billion): mandatory testing at least semiannually.
    • Regulations may allow variation in schedule, size, and tenor of advances to reduce stigma and balance operational burden, with input from affected institutions.

  • Supervisory integration and reporting (regulations)

    • Testing readiness to borrow must be incorporated into liquidity risk management examinations by each regulator.
    • Supervisory standards should positively consider an institution’s ability to access liquidity via the discount window, including pre-pledged collateral.

  • Collateral and operations improvements (mandatory actions)

    • Regulators must implement enhancements to enable rapid access to advances (e.g., ensuring access until at least 8 p.m. in all time zones; online secure access platform; standardized technical specs; streamlined collateral transfers).
    • Simplified procedures for pledging smaller loans as collateral; outreach programs for smaller institutions.

  • Collateral harmonization and reporting

    • Regulatory harmonization of collateral policies with FHFA and Federal Home Loan Banks to streamline transfers.
    • Board must review weekly balance-sheet reporting to assess potential market distortions from discount window activity and may adjust disclosure practices as needed.

  • Study and future measures

    • Within one year, the Board (with OCC, FDIC, NCUA) must study additional measures to reduce stigma and improve the process, including pricing, cost-benefit analysis of changes, and potential statutory amendments.

Who is affected

  • All depository institutions eligible to seek discount window advances, including banks and insured credit unions.
  • Primary federal regulators (Board, FDIC, OCC, NCUA) responsible for implementing and supervising the testing framework.
  • Federal Reserve Banks as administrators of the discount window and associated operational changes.

Procedural and timeline aspects

  • Introduced May 20, 2026; referred to the Senate Committee on Banking, Housing, and Urban Affairs.
  • Regulatory implementation deadline: regulations due within 180 days after enactment.
  • Scheduling and operational changes to be implemented within 180 days of enactment (for improvements to access), with ongoing enhancements and reporting updates over subsequent months.
  • A follow-up study and report due within one year of enactment.

This bill is focused on ensuring preparedness and reducing stigma around discount window borrowing through mandatory testing, enhanced operations, and tighter supervisory integration.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.