Today, Congresswoman Monica De La Cruz's (TX-15) legislation, the Bringing the Discount Window into the 21stCentury Act, passed the House Financial Services Committee. The legislation will direct the Federal Reserve to review and address the operations of its discount window, a critical tool used to support liquidity of financial institutions, like community banks, during times of financial stress.
"By improving efficiencies in the U.S. banking system, we are ensuring homeowners, small businesses, and farmers can access capital. Committee passage is just the first step toward implementing these improvements. Next stop:the House floor!"- Congresswoman Monica De La Cruz
The legislation is co-sponsored by Financial Services Committee Task Force on Monetary Policy Chairman Frank Lucas (OK-03) and Chairman of Oversight and Investigations Subcommittee Dan Meuser (PA-09).Supporting organizations include the American Bankers Association, Bank Policy Institute, Independent Community Bankers of America, and Defense Credit Union Council.
“We support Representative De La Cruz’s efforts to restore the Fed’s discount window as a credible source of bank liquidity in times of stress. Operational inefficiencies and persistent stigma render the discount window underutilized, and this legislation will help address these barriers and further strengthen financial stability.”-Greg Baer, Bank Policy Institute, President and CEO
Background:
The Bringing the Discount Window into the 21st Century Act would require the Federal Reserve to conduct a review of the discount window and implement improvements to the current process.The discount window,one of the Federal Reserve's abilities to lend to depository institutions like banks and credit unions, provides critical support to community banks during times of financial stress. This legislation is the first step toward modernizing current operations.
