Warner pushes bill requiring banks to test discount window
The lawmaker introduced a measure that would reduce stigma tied to the Fed’s short-term lending facility, which has seen a litany of attention from regulators in recent weeks.
Dive Brief:
Sen. Mark Warner, D-VA, introduced legislation Thursday seeking to require banks to engage in periodic test borrowing at the Federal Reserve’s discount window.
The bill would also require regulators evaluating banks’ liquidity preparedness to give lenders credit if they can successfully use the window. The discount window is the Fed’s short-term lending facility designed to help banks facing a liquidity crunch.
The bill also outlined ways the Fed needs to modernize discount window operations, including by extending available hours, according to a summary of the legislation shared with Banking Dive.
Dive Insight:
Warner highlighted the “urgent need to reform” the window following last year’s regional bank failures, saying in a statement Friday the bill “will implement key reforms to make sure that banks can actually use the discount window, reduce the unnecessary stigma associated with that use, and improve the window’s operations to meet the challenges of the digital age.”
The lawmaker indicated his intentions to put forth the legislation last December, positing that requiring banks to periodically use the discount window would ease the stigma that has long been tied with the central bank’s safety net.
MORE:
www.bankingdive.com/news/warner-discount-window-bill-fed-powell-liquidity-banking/722551/