Bringing the Discount Window into the 21st Century Act

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 3390, the Bringing the Discount Window into the 21st Century Act, sponsored by Representative De La Cruz.

It has been almost 3 years since we saw the dramatic failure of Silicon Valley Bank, Signature Bank, and First Republic Bank, representing the second, third, and fourth largest bank failures in United States history.

Silicon Valley Bank was the fastest bank run ever, with $42 billion of deposits withdrawn on a Thursday and customers trying to pull out another $100 billion the next morning when the bank failed.

Upon learning of Silicon Valley's failure, Ranking Member Waters organized Member briefings with the Treasury Secretary and banking regulators. We encouraged Biden's regulators, led by former Secretary Yellen, to use their emergency tools to mitigate the damage, which they successfully did.

We worked with our former chairman, Mr. McHenry, and launched a bipartisan investigation to conduct oversight and understand what went wrong. We received reports and supervisory documents, and hearings were also held.

Based on the lessons we learned, I and my Democratic colleagues, including Representatives Waters, Sherman, Lynch, Green, Casten, Tlaib, and Pettersen, introduced a wave of commonsense bills to promote safety, soundness, and accountability.

Since then, we have been pushing for action that is long overdue, and I am glad that Chairman Hill agreed to include several of our post- Silicon Valley Bank bills in the housing package.

We have other good reforms for community financial institutions in that packet, but another most critical issue Congress must address is the need to update our deposit insurance framework.

I appreciate that Chairman Hill recently held a hearing on Representative Waters' bill, H.R. 4551, the Employee Paycheck and Small Business Protection Act. We have had a good discussion on the pros and cons of different approaches.

After Silicon Valley Bank's failure, community banks watched small businesses move their deposits to the biggest banks to make sure that they could pay their workers in good times or bad.

There have been at least 37 bank failures since 2007, including a recent one in Oklahoma, that were too small for regulators to use emergency tools, and unlike Silicon Valley Bank's customers, small business depositors lost money through no fault of their own.

Representative Waters' bill would take the data-driven approach that Chairman Hill prefers to study and then update our deposit insurance framework to allow more business payment accounts to be insured based on that research.

This effort has strong bipartisan support, including that of the Vice President and Treasury Secretary, so I hope we can advance those reforms soon for community financial institutions, midsized banks, and small businesses and their workers.

Turning back to the bill that we are considering here, H.R. 3390, I have heard from minority deposit institutions and other community banks about various challenges that they have had in accessing Fed facilities, including the discount window in 2023.

This is a commonsense bill to ensure the Federal Reserve improves its discount window to provide emergency liquidity to banks when they need it.

I appreciate that the chairman and sponsor worked with Representative Waters and Representative Foster to include our amendments to help ensure that we learn how technology may require faster emergency liquidity deployment, as well as understanding

barriers like stigma that need to be addressed to improve the functioning of the discount window.

Mr. Speaker, I urge Members to support H.R. 3390, and I reserve the balance of my time.

Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Illinois (Mr. Foster), who is also the ranking member of the Subcommittee on Financial Institutions.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, this bill will help ensure smaller banks can access the Federal discount window when they need it, which may be sooner rather than later, given that Trump's policies are once again raising the threat of another crisis.

Therefore, I urge Members to vote ``yes,'' and I yield back the balance of my time.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3390) to amend the Federal Reserve Act to require the Board of Governors of the Federal Reserve System to carry out a review of discount window operations and to implement improvements to such operations, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and include extraneous material for the Record on this bill.

Mr. Speaker, I yield myself such time as I may consume. I rise today in support of Ms. De La Cruz's bill, the Bringing the Discount Window into the 21st Century Act.

It is critical that our banks have the ability to have emergency liquidity in the case of a crisis or having liquidity intraday in the banking day without a stigma. These are challenges. They were challenges before the financial crisis, but it continues today.

This bill allows banks to keep credit flowing through the economy while reducing risks that a panic-induced bank run would lead to unnecessary bank failures.

The discount window has been underused and burdened by operational difficulties and stigma. We have seen that on this House floor in our economy, most recently in the failures of Silicon Valley Bank and Signature Bank in the spring of 2023, where fear of a market reaction and outdated technology delayed the use of the discount window when it was needed most.

It is critical that the Federal Reserve learn from these mistakes of the past and allow the discount window to fulfill its role as the primary tool for stabilizing the financial system in a time of stress.

Representative De La Cruz's bipartisan bill would do just that by directing the Fed to conduct a review of the discount window, submit a plan to Congress with concrete, actionable reforms, and then provide regular updates on its implementation.

For example, H.R. 3390 explicitly directs the Federal Reserve to evaluate whether extending operating hours and improving technology would make the discount window more accessible and thereby more effective. In requiring the Fed to make changes based on these findings, H.R. 3390 goes beyond a study bill and would meaningfully address deficiencies that would make the American financial system stronger and more stable.

Mr. Speaker, I thank the gentlewoman from south Texas (Ms. De La Cruz) for her leadership on this important issue to make sure the Fed is ready and the discount window use is appropriate for the 21st century, where money now moves, Mr. Speaker, at the press of a button.

Mr. Speaker, I urge my colleagues to support this bill, and I reserve the balance of my time.

Mr. Speaker, I include in the Record the CBO estimate for this bill.

Mr. Speaker, I yield 3 minutes to the gentlewoman from Texas (Ms. De La Cruz), the author of this important legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, I thank the gentlewoman from south Texas for advancing this bill. I thank the minority's consistent work to make sure that this is a bill that will substantially direct the Federal Reserve to make sure our discount window is effective and used by our financial institutions to enhance financial stability.

Mr. Speaker, I urge both sides of the aisle to vote ``yes,'' and I yield back the balance of my time.

Mr. Speaker, I thank Chairman Hill for yielding.

Mr. Speaker, today, I rise in support of my bill, H.R. 3390, the Bringing the Discount Window into the 21st Century Act of 2025, which has received broad bipartisan support in the Financial Services Committee.

H.R. 3390 addresses needed improvements for the Federal Reserve's discount window operations and technology to ensure it is better equipped to serve depository institutions, including community banks, which strengthens the resiliency of our U.S. financial system.

The Federal Reserve's important role as the lender of last resort is supported by the Fed's discount window. In times when depository institutions need liquidity, they can rely on the discount window to fulfill short-term liquidity needs by pledging high-quality collateral such as U.S. Treasuries in return for cash.

Unfortunately, as we saw most recently in the 2023 bank failures, stigma remains, which can cause the discount window to be underused or banks to delay accessing it for fear of market reactions.

Bringing the Discount Window into the 21st Century Act ensures that Congress acts on the bipartisan consensus to modernize the Federal Reserve's discount window operations and reduce the stigma of accessing it.

H.R. 3390 does so by requiring the Federal Reserve to conduct a review of the discount window to identify deficiencies and develop a remediation plan. This review will identify improvements in all aspects of discount window operations, including technology, operating hours, stigma, and interaction with other providers of liquidity, including the Federal Home Loan Banks, during both normal operations and times of financial stress.

By improving efficiencies in the U.S. banking system, we are ensuring homeowners, small businesses, and farmers can access capital from their financial institutions when they need it most.

Mr. Speaker, I urge my colleagues to join me in support of H.R. 3390.

Mr. Speaker, I rise in support of this legislation, which requires the Federal Reserve to conduct a comprehensive review of discount window operations, including its technological infrastructure, cybersecurity, communications, real-time monitoring, and oversight mechanisms across the Federal Reserve System.

In 2023, we witnessed the most significant banking turmoil since the global financial crisis. During that period, record numbers of institutions turned to the discount window, borrowing at unprecedented levels with more than $150 billion borrowed during the peak period.

The system held in large part because of the reforms and regulatory tools provided and implemented as part of the Dodd-Frank Act, but it came under stress.

I also appreciate the willingness of the legislation's sponsor to accept my amendment during the Financial Services Committee markup of this legislation. With my amendment, this bill recognizes that bank runs will now move at the speed of mobile online banking and instant communications. Soon, they will move at the speed of agentic AI.

The bank failures of 2023 showed that liquidity pressures can escalate in hours, not days, a speed that will only intensify with the rise of artificial intelligence and autonomous financial agents.

This legislation will require the Federal Reserve Board to develop a written plan to remedy deficiencies like those to be identified during the review process. This review and remediation will lead to more accessible, responsive, and secure discount window operations.

Mr. Speaker, I encourage my colleagues to support this bill.