HR 3390 — Bringing the Discount Window into the 21st Century Act

changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

 FEDERAL RESERVE ACT

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 board of governors of the federal reserve system

 Sec. 10. The Board of Governors of the Federal Reserve System 
(hereinafter referred to as the ``Board'') shall be composed of 
seven members, to be appointed by the President, by and with 
the advice and consent of the Senate, after the date of 
enactment of the Banking Act of 1935, for terms of fourteen 
years except as hereinafter provided, but each appointive 
member of the Federal Reserve Board in office on such date 
shall continue to serve as a member of the Board until February 
1, 1936, and the Secretary of the Treasury and the Comptroller 
of the Currency shall continue to serve as members of the Board 
until February 1, 1936. In selecting the members of the Board, 
not more than one of whom shall be selected from any one 
Federal Reserve district, the President shall have due regard 
to a fair representation of the financial, agricultural, 
industrial, and commercial interests, and geographical 
divisions of the country. In selecting members of the Board, 
the President shall appoint at least 1 member with demonstrated 
primary experience working in or supervising community banks 
having less than $10,000,000,000 in total assets. The members 
of the Board shall devote their entire time to the business of 
the Board and shall each receive an annual salary of $15,000, 
payable monthly, together with actual necessary traveling 
expenses.
 The members of the Board shall be ineligible during the time 
they are in office and for two years thereafter to hold any 
office, position, or employment in any member bank, except that 
this restriction shall not apply to a member who has served the 
full term for which he was appointed. Upon the expiration of 
the term of any appointive member of the Federal Reserve Board 
in office on the date of enactment of the Banking Act of 1935, 
the President shall fix the term of the successor to such 
member at not to exceed fourteen years, as designated by the 
President at the time of nomination, but in such manner as to 
provide for the expiration of the term of not more than one 
member in any two-year period, and thereafter each member shall 
hold office for a term of fourteen years from the expiration of 
the term of his predecessor, unless sooner removed for cause by 
the President. Of the persons thus appointed, 1 shall be 
designated by the President, by and with the advice and consent 
of the Senate, to serve as Chairman of the Board for a term of 
4 years, and 2 shall be designated by the President, by and 
with the advice and consent of the Senate, to serve as Vice 
Chairmen of the Board, each for a term of 4 years, 1 of whom 
shall serve in the absence of the Chairman, as provided in the 
fourth undesignated paragraph of this section, and 1 of whom 
shall be designated Vice Chairman for Supervision. The Vice 
Chairman for Supervision shall develop policy recommendations 
for the Board regarding supervision and regulation of 
depository institution holding companies and other financial 
firms supervised by the Board, and shall oversee the 
supervision and regulation of such firms. The chairman of the 
Board, subject to its supervision, shall be its active 
executive officer. Each member of the Board shall within 
fifteen days after notice of appointment make and subscribe to 
the oath of office. Upon the expiration of their terms of 
office, members of the Board shall continue to serve until 
their successors are appointed and have qualified. Any person 
appointed as a member of the Board after the date of enactment 
of the Banking Act of 1935 shall not be eligible for 
reappointment as such member after he shall have served a full 
term of fourteen years.
 The Board of Governors of the Federal Reserve System shall 
have power to levy semiannually upon the Federal reserve banks, 
in proportion to their capital stock and surplus, an assessment 
sufficient to pay its estimated expenses and the salaries of 
its members and employees for the half year succeeding the 
levying of such assessment, together with any deficit carried 
forward from the preceding half year, and such assessments may 
include amounts sufficient to provide for the acquisition by 
the Board in its own name of such site or building in the 
District of Columbia as in its judgment alone shall be 
necessary for the purpose of providing suitable and adequate 
quarters for the performance of its functions. After September 
1, 2000, the Board may also use such assessments to acquire, in 
its own name, a site or building (in addition to the facilities 
existing on such date) to provide for the performance of the 
functions of the Board. After approving such plans, estimates, 
and specifications as it shall have caused to be prepared, the 
Board may, notwithstanding any other provision of law, cause to 
be constructed on any site so acquired by it a building or 
buildings suitable and adequate in its judgment for its 
purposes and proceed to take all such steps as it may deem 
necessary or appropriate in connection with the construction, 
equipment, and furnishing of such building or buildings. The 
Board may maintain, enlarge, or remodel any building or 
buildings so acquired or constructed and shall have sole 
control of such building or buildings and space therein.
 The principal offices of the Board shall be in the District 
of Columbia. At meetings of the Board the chairman shall 
preside, and, in his absence, the vice chairman shall preside. 
In the absence of the chairman and the vice chairman, the Board 
shall elect a member to act as chairman pro tempore. The Board 
shall determine and prescribe the manner in which its 
obligations shall be incurred and its disbursements and 
expenses allowed and paid, and may leave on deposit in the 
Federal Reserve banks the proceeds of assessments levied upon 
them to defray its estimated expenses and the salaries of its 
members and employees, whose employment, compensation, leave, 
and expenses shall be governed solely by the provisions of this 
Act, specific amendments thereof, and rules and regulations of 
the Board not inconsistent therewith; and funds derived from 
such assessments shall not be construed to be Government funds 
or appropriated moneys. No member of the Board of Governors of 
the Federal Reserve System shall be an officer or director of 
any bank, banking institution, trust company, or Federal 
Reserve bank or hold stock in any bank, banking institution, or 
trust company; and before entering upon his duties as a member 
of the Board of Governors of the Federal Reserve System he 
shall certify under oath that he has complied with this 
requirement, and such certification shall be filed with the 
secretary of the Board. Whenever a vacancy shall occur, other 
than by expiration of term, among the six members of the Board 
of Governors of the Federal Reserve System appointed by the 
President as above provided, a successor shall be appointed by 
the President, by and with the advice and consent of the 
Senate, to fill such vacancy, and when appointed he shall hold 
office for the unexpired term of his predecessor.
 The President shall have power to fill all vacancies that 
may happen on the Board of Governors of the Federal Reserve 
System during the recess of the Senate by granting commissions 
which shall expire with the next session of the Senate.
 Nothing in this Act contained shall be construed as taking 
away any powers heretofore vested by law in the Secretary of 
the Treasury which relate to the supervision, management, and 
control of the Treasury Department and bureaus under such 
department, and wherever any power vested by this Act in the 
Board of Governors of the Federal Reserve System or the Federal 
reserve agent appears to conflict with the powers of the 
Secretary of the Treasury, such powers shall be exercised 
subject to the supervision and control of the Secretary.
 The Board of Governors of the Federal Reserve System shall 
annually make a full report of its operations to the Speaker of 
the House of Representatives, who shall cause the same to be 
printed for the information of the Congress. The report 
required under this paragraph shall include the reports 
required under section 707 of the Equal Credit Opportunity Act, 
section 18(f)(7) of the Federal Trade Commission Act, section 
114 of the Truth in Lending Act, and the tenth undesignated 
paragraph of this section.

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 No Federal Reserve bank may authorize the acquisition or 
construction of any branch building, or enter into any contract 
or other obligation for the acquisition or construction of any 
branch building, without the approval of the Board.
 The Board of Governors of the Federal Reserve System shall 
keep a complete record of the action taken by the Board and by 
the Federal Open Market Committee upon all questions of policy 
relating to open-market operations and shall record therein the 
votes taken in connection with the determination of open-market 
policies and the reasons underlying the action of the Board and 
the Committee in each instance. The Board shall keep a similar 
record with respect to all questions of policy determined by 
the Board, and shall include in its annual report to the 
Congress a full account of the action so taken during the 
preceding year with respect to open-market policies and 
operations and with respect to the policies determined by it 
and shall include in such report a copy of the records required 
to be kept under the provisions of this paragraph.
 [(12)] (11) Appearances before congress.--The Vice 
 Chairman for Supervision shall appear before the 
 Committee on Banking, Housing, and Urban Affairs of the 
 Senate and the Committee on Financial Services of the 
 House of Representatives and at semi-annual hearings 
 regarding the efforts, activities, objectives, and 
 plans of the Board with respect to the conduct of 
 supervision and regulation of depository institution 
 holding companies and other financial firms supervised 
 by the Board.
 (12) Review of discount window operations.--
 (A) In general.--Not later than 60 days after 
 the date of enactment of this paragraph, the 
 Board of Governors shall commence a review of 
 the discount window lending programs of the 
 Federal reserve banks (the ``discount 
 window''), and shall complete such review not 
 later than 240 days after the date of enactment 
 of this paragraph.
 (B) Contents.--The review required by 
 subparagraph (A) shall include a consideration 
 of--
 (i) the effectiveness of the discount 
 window in providing liquidity to 
 financial institutions, including in 
 times of financial stress;
 (ii) whether the technology 
 infrastructure, including means of 
 communications, are sufficient to 
 support the timely provision of 
 liquidity, including in times of 
 financial stress;
 (iii) the effectiveness of 
 cybersecurity measures implemented with 
 respect to discount window operations;
 (iv) the effectiveness of 
 communications between Federal reserve 
 banks, financial institutions, the 
 Board of Governors, the Federal Deposit 
 Insurance Corporation, the Comptroller 
 of the Currency, and the Secretary of 
 the Treasury regarding discount window 
 operations;
 (v) the effectiveness of the Board of 
 Governors in providing oversight of the 
 discount window and in ensuring 
 consistent access to the discount 
 window across the Federal Reserve 
 System;
 (vi) how the discount window 
 interacts with other providers of 
 liquidity, including the Federal Home 
 Loan Banks, during both normal 
 operations and times of financial 
 distress;
 (vii) the effectiveness of existing 
 discount window operating hours and 
 whether such hours should be expanded, 
 taking into account the interaction 
 between discount window operating hours 
 and the operating hours of payment 
 systems of the Federal reserve banks, 
 such as the Fedwire Funds Service and 
 FedNow Service;
 (viii) the impact of mobile banking 
 and instant communications technology 
 on depositor behavior and liquidity 
 risk posed to financial institutions, 
 including how the discount window can--
 (I) help financial 
 institutions better respond to 
 rapid liquidity shortfalls; and
 (II) prevent broader 
 financial instability; and
 (ix) the effectiveness of the 
 discount window in light of the stigma 
 associated with its usage, ways to 
 reduce such stigma, and ways to improve 
 access, operational efficiency, 
 transparency, and timeliness of the 
 process for financial institutions 
 seeking advances, including on the 
 pricing and other terms of such 
 advances.
 (C) Remediation plan.--After the Board of 
 Governors completes the review required by 
 subparagraph (A), the Board of Governors, in 
 consultation with the Federal reserve banks, 
 shall--
 (i) identify deficiencies with the 
 discount window and areas for enhancing 
 discount window effectiveness; and
 (ii) develop a written plan to 
 remediate the identified deficiencies 
 and implement the identified 
 enhancements, which shall include--
 (I) an identification of 
 actions that will be taken to 
 enhance discount window 
 effectiveness and remediate 
 identified deficiencies;
 (II) timelines and milestones 
 for implementing the plan and 
 measures to demonstrate how the 
 implemented improvements will 
 be maintained on an ongoing 
 basis; and
 (III) measures of managing 
 and controlling any 
 deficiencies and current 
 operations until the plan is 
 implemented in full.
 (D) Report to congress on review and plan.--
 (i) In general.--Not later than 365 
 days after the date of enactment of 
 this paragraph, the Board of Governors 
 shall submit a report to the Committee 
 on Financial Services of the House of 
 Representatives and the Committee on 
 Banking, Housing, and Urban Affairs of 
 the Senate containing--
 (I) the findings of the 
 review required by subparagraph 
 (A); and
 (II) the remediation plan 
 required by subparagraph (C).
 (ii) Consultation.--Before submitting 
 the report required by clause (i), the 
 Board of Governors shall--
 (I) provide a copy of the 
 proposed report to the 
 Comptroller of the Currency, 
 the Federal Deposit Insurance 
 Corporation, and the Secretary 
 of the Treasury; and
 (II) provide the Comptroller 
 of the Currency, the Federal 
 Deposit Insurance Corporation, 
 and the Secretary of the 
 Treasury with an opportunity to 
 provide feedback on the report.
 (iii) Testimony.--The Chairman of the 
 Board of Governors shall, at the semi-
 annual hearing required under section 
 2B, testify with respect to the 
 contents of the report required under 
 this subparagraph.
 (E) Annual reports to congress.--
 (i) Reports by the board.--The Board 
 of Governors shall submit an annual 
 report to the Committee on Financial 
 Services of the House of 
 Representatives and the Committee on 
 Banking, Housing, and Urban Affairs of 
 the Senate containing a review of the 
 effectiveness of discount window 
 operations and a progress report on the 
 actions taken to implement the 
 identified enhancements described in 
 subparagraph (C).
 (ii) Reports by the inspector 
 general.--The Inspector General of the 
 Board of Governors of the Federal 
 Reserve System and the Bureau of 
 Consumer Financial Protection shall 
 submit an annual report to the 
 Committee on Financial Services of the 
 House of Representatives and the 
 Committee on Banking, Housing, and 
 Urban Affairs of the Senate containing 
 a report on the progress of the Board 
 of Governors in implementing the 
 remediation plan required by 
 subparagraph (C).
 (F) Confidential report information.--Any 
 report required under this paragraph may 
 contain a confidential annex containing 
 information that, if made public, could--
 (i) impact monetary policy, financial 
 stability, or cybersecurity; or
 (ii) significantly endanger the 
 financial stability of any financial 
 institution.
 (G) Repeal.--This paragraph shall be repealed 
 on the date on which the Board of Governors 
 notifies the Congress and publishes on a public 
 website of the Board of Governors that the 
 remediation plan required under subparagraph 
 (C) has been fully implemented.
[Section 2(2) of H.R. 3390 (as reported) provides for an 
amendment to section 10 of the Federal Reserve Act by inserting 
after paragraph (11) as redesignated a new paragraph (12). 
Subparagraph (G) of paragraph (12) provides ``This paragraph 
shall be repealed on the date on which the Board of Governors 
notifies the Congress and publishes on a public website of the 
Board of Governors that the remediation plan required under 
subparagraph (C) has been fully implemented.'' On such date, 
paragraph (12) of section 10 (represented below in roman 
typeface) is repealed as follows:]

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 [(12) Review of discount window operations.--
 [(A) In general.--Not later than 60 days 
 after the date of enactment of this paragraph, 
 the Board of Governors shall commence a review 
 of the discount window lending programs of the 
 Federal reserve banks (the ``discount 
 window''), and shall complete such review not 
 later than 240 days after the date of enactment 
 of this paragraph.
 [(B) Contents.--The review required by 
 subparagraph (A) shall include a consideration 
 of--
 [(i) the effectiveness of the 
 discount window in providing liquidity 
 to financial institutions, including in 
 times of financial stress;
 [(ii) whether the technology 
 infrastructure, including means of 
 communications, are sufficient to 
 support the timely provision of 
 liquidity, including in times of 
 financial stress;
 [(iii) the effectiveness of 
 cybersecurity measures implemented with 
 respect to discount window operations;
 [(iv) the effectiveness of 
 communications between Federal reserve 
 banks, financial institutions, the 
 Board of Governors, the Federal Deposit 
 Insurance Corporation, the Comptroller 
 of the Currency, and the Secretary of 
 the Treasury regarding discount window 
 operations;
 [(v) the effectiveness of the Board 
 of Governors in providing oversight of 
 the discount window and in ensuring 
 consistent access to the discount 
 window across the Federal Reserve 
 System;
 [(vi) how the discount window 
 interacts with other providers of 
 liquidity, including the Federal Home 
 Loan Banks, during both normal 
 operations and times of financial 
 distress;
 [(vii) the effectiveness of existing 
 discount window operating hours and 
 whether such hours should be expanded, 
 taking into account the interaction 
 between discount window operating hours 
 and the operating hours of payment 
 systems of the Federal reserve banks, 
 such as the Fedwire Funds Service and 
 FedNow Service;
 [(viii) the impact of mobile banking 
 and instant communications technology 
 on depositor behavior and liquidity 
 risk posed to financial institutions, 
 including how the discount window can--
 [(I) help financial 
 institutions better respond to 
 rapid liquidity shortfalls; and
 [(II) prevent broader 
 financial instability; and
 [(ix) the effectiveness of the 
 discount window in light of the stigma 
 associated with its usage, ways to 
 reduce such stigma, and ways to improve 
 access, operational efficiency, 
 transparency, and timeliness of the 
 process for financial institutions 
 seeking advances, including on the 
 pricing and other terms of such 
 advances.
 [(C) Remediation plan.--After the Board of 
 Governors completes the review required by 
 subparagraph (A), the Board of Governors, in 
 consultation with the Federal reserve banks, 
 shall--
 [(i) identify deficiencies with the 
 discount window and areas for enhancing 
 discount window effectiveness; and
 [(ii) develop a written plan to 
 remediate the identified deficiencies 
 and implement the identified 
 enhancements, which shall include--
 [(I) an identification of 
 actions that will be taken to 
 enhance discount window 
 effectiveness and remediate 
 identified deficiencies;
 [(II) timelines and 
 milestones for implementing the 
 plan and measures to 
 demonstrate how the implemented 
 improvements will be maintained 
 on an ongoing basis; and
 [(III) measures of managing 
 and controlling any 
 deficiencies and current 
 operations until the plan is 
 implemented in full.
 [(D) Report to congress on review and plan.--
 [(i) In general.--Not later than 365 
 days after the date of enactment of 
 this paragraph, the Board of Governors 
 shall submit a report to the Committee 
 on Financial Services of the House of 
 Representatives and the Committee on 
 Banking, Housing, and Urban Affairs of 
 the Senate containing--
 [(I) the findings of the 
 review required by subparagraph 
 (A); and
 [(II) the remediation plan 
 required by subparagraph (C).
 [(ii) Consultation.--Before 
 submitting the report required by 
 clause (i), the Board of Governors 
 shall--
 [(I) provide a copy of the 
 proposed report to the 
 Comptroller of the Currency, 
 the Federal Deposit Insurance 
 Corporation, and the Secretary 
 of the Treasury; and
 [(II) provide the Comptroller 
 of the Currency, the Federal 
 Deposit Insurance Corporation, 
 and the Secretary of the 
 Treasury with an opportunity to 
 provide feedback on the report.
 [(iii) Testimony.--The Chairman of 
 the Board of Governors shall, at the 
 semi-annual hearing required under 
 section 2B, testify with respect to the 
 contents of the report required under 
 this subparagraph.
 [(E) Annual reports to congress.--
 [(i) Reports by the board.--The Board 
 of Governors shall submit an annual 
 report to the Committee on Financial 
 Services of the House of 
 Representatives and the Committee on 
 Banking, Housing, and Urban Affairs of 
 the Senate containing a review of the 
 effectiveness of discount window 
 operations and a progress report on the 
 actions taken to implement the 
 identified enhancements described in 
 subparagraph (C).
 [(ii) Reports by the inspector 
 general.--The Inspector General of the 
 Board of Governors of the Federal 
 Reserve System and the Bureau of 
 Consumer Financial Protection shall 
 submit an annual report to the 
 Committee on Financial Services of the 
 House of Representatives and the 
 Committee on Banking, Housing, and 
 Urban Affairs of the Senate containing 
 a report on the progress of the Board 
 of Governors in implementing the 
 remediation plan required by 
 subparagraph (C).
 [(F) Confidential report information.--Any 
 report required under this paragraph may 
 contain a confidential annex containing 
 information that, if made public, could--
 [(i) impact monetary policy, 
 financial stability, or cybersecurity; 
 or
 [(ii) significantly endanger the 
 financial stability of any financial 
 institution.
 [(G) Repeal.--This paragraph shall be 
 repealed on the date on which the Board of 
 Governors notifies the Congress and publishes 
 on a public website of the Board of Governors 
 that the remediation plan required under 
 subparagraph (C) has been fully implemented. ]

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