Today, Congresswoman Monica De La Cruz (TX-15) introduced the Bringing the Discount Window into the 21st Century Act to direct the Federal Reserve to review and address the operations of its discount window, a critical tool used to support the liquidity of financial institutions, like community banks, during times of financial stress.
"By improving efficiencies in the U.S. banking system, we are ensuring opportunities for homeowners, small businesses, and farmers to access capital. This legislation will review current operations and implement improvements to sustain the Federal Reserve's ability to provide long-term support for the banking sector."- Congresswoman Monica De La Cruz
The legislation is supported by the American Bankers Association.
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 abilitites 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 the current operations and ensuring the Federal Reserve is able to support financial institutions of all sizes.
During the Financial Services Committee hearing on Enhancing Competition: Shaping the Future of Bank Mergers and De Novo Formation, De La Cruz discussed the importance of preventing lending issues in times of crisis when small community banks need to access the discount window the most.
