Technical corrections only. The diff between v3 and v4 reflects the bill's procedural status change from being engrossed in the House to being referred in the Senate. There are no substantive policy changes to the legislative text.
Bringing the Discount Window into the 21st Century Act
- Sponsor
- Rep. De La Cruz, Monica [R-TX-15]
- Committees
- Banking, Housing, and Urban Affairs Committee (primary)
- Last action
- Feb 11, 2026
Bottom line
This bill requires the Federal Reserve to review and modernize its discount window operations to enhance financial stability and liquidity provision in the face of evolving financial technologies and market dynamics.
What it actually does
This bill mandates that the Board of Governors of the Federal Reserve System conduct a comprehensive review of its discount window lending operations. The review must assess various aspects, including technology infrastructure, cybersecurity, inter-agency communications, operating hours, and the impact of mobile banking on liquidity risk. Following the review, the Board must develop a remediation plan to address identified deficiencies and implement enhancements, with annual reports and testimony to Congress on progress.
Proponents argue
Proponents argue that modernizing the discount window is crucial for ensuring financial stability in an era of rapid technological change and instant communications. They believe that a more effective and accessible discount window can help financial institutions better manage liquidity risks, prevent bank runs, and reduce broader financial instability, especially given the lessons learned from recent financial stresses. Addressing the stigma of usage is key to its effectiveness as a backstop.
Opponents contend
Opponents might argue that mandating such a detailed review and remediation plan could be seen as micromanaging the Federal Reserve's operational independence or that the Federal Reserve already has sufficient internal processes to address these issues. Some might contend that focusing solely on the discount window might distract from other, more fundamental causes of financial instability, or that expanding operating hours or reducing stigma could inadvertently encourage moral hazard among financial institutions.
The bill is concise and clearly written, making it accessible for a quick read and understanding of its core purpose.
Section 2(2), adding new paragraph (12)(A) to Section 10 of the Federal Reserve Act.
Mandate for Comprehensive Review of Discount Window Operations
This provision requires the Board of Governors of the Federal Reserve System to initiate a comprehensive review of its discount window lending programs within 60 days of the bill's enactment and complete it within 240 days. The review is intended to assess the effectiveness and operational aspects of the discount window.
Supporters argue
Supporters argue that a mandated, time-bound review ensures accountability and forces the Federal Reserve to critically examine and improve a vital tool for financial stability, especially in light of evolving financial markets and technology.
Critics contend
Critics might argue that the Federal Reserve already conducts internal reviews and that a legislative mandate could be seen as an unnecessary intrusion into its operational independence, potentially diverting resources from ongoing supervisory or monetary policy functions.
Tradeoffs
This provision balances Congressional oversight with the Federal Reserve's operational autonomy.
Section 2(2), adding new paragraph (12)(B) to Section 10 of the Federal Reserve Act.
Detailed Scope of Discount Window Review
This section specifies nine key areas the review must cover, including technology infrastructure, cybersecurity, inter-agency communications, Board oversight, interaction with other liquidity providers (like Federal Home Loan Banks), operating hours (considering Fedwire and FedNow), impact of mobile banking on liquidity risk, and ways to reduce the stigma associated with discount window usage.
Section 2(2), adding new paragraph (12)(C) to Section 10 of the Federal Reserve Act.
Development of Remediation and Enhancement Plan
Following the review, the Board of Governors, in consultation with Federal Reserve Banks, must identify deficiencies and areas for enhancement, and then develop a written plan to address these. This plan must include specific actions, timelines, milestones, and measures for ongoing maintenance and managing current operations until full implementation.
Section 2(2), adding new paragraph (12)(D) and (E) to Section 10 of the Federal Reserve Act.
Congressional Reporting and Oversight
The Board of Governors must submit a report to Congress within 365 days of enactment, detailing the review findings and the remediation plan. Before submission, the Board must consult with the Comptroller of the Currency, FDIC, and Treasury. The Chairman of the Board must also testify on the report's contents during semi-annual hearings. Additionally, the Board and its Inspector General must submit annual progress reports to Congress on the implementation of the remediation plan.
Section 2(2), adding new paragraph (12)(F) and (G) to Section 10 of the Federal Reserve Act.
Confidentiality Safeguards and Sunset Clause
This provision allows for a confidential annex in reports if public disclosure could impact monetary policy, financial stability, cybersecurity, or significantly endanger any financial institution. The entire paragraph (12) will be repealed once the Board notifies Congress and publishes on its website that the remediation plan has been fully implemented.