,,ii #aaith ,,congress #b;d ,session ,s4 #dehe ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,may #bj1 #bjbf,mr4 ,warner 7for himself and ,mr4 ,kennedy7 introduced the following bill2 which was read twice and referred to the ,committee on ,banking1 ,housing1 and ,urban ,affairs ,a ,,bill ,to amend the ,federal ,reserve ,act to mandate discount window testing1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,discount ,window ,preparedness ,act4 #b4 ,demonstration of ability to use the discount window 7a7 ,in general ,section #aj;,b of the ,federal ,reserve ,act 7#ab ,u4,s4,c4 #cdg;b7 is amended by adding at the end the following3 7c7 ,requirement for depository institutions ,to demonstrate ability ,to seek advances 7#a7 ,definitions ,in this subsection3 7,a7 ,appropriate congressional committees ,the term appropriate congressional committees means the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate and the ,committee on ,financial ,services of the ,house of ,representatives4 7,b7 ,depository institution ,the term depository institution means-- 7i7 any institution the deposits of which are insured under the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahaa et seq472 or 7ii7 an insured credit union1 as defined in section #aja of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageb74 7#b7 ,requirements ,not later than #a year after the date of enactment of this subsection1 any depository institution operating in the ,united ,states that is eligible to seek advances under this section shall1 pursuant to regulations promulgated under this subsection1 conduct testing of such advances and demonstrate1 to the satisfaction of the ,federal reserve bank at which the depository institution maintains an account1 or at which another depository institution maintains an account on its behalf1 and to the primary ,federal regulator of the depository institution1 that-- 7,a7 the depository institution has1 and maintains on an ongoing basis1 all operational and technical capacities necessary to borrow advances in a timely and efficient manner2 as demonstrated by such required testing2 and 7,b7 the depository institution maintains collateral with the ,federal reserve bank of which it is a member to support borrowing in accordance with the requirements of this subsection4 7#c7 ,regulations ,not later than #ahj days after the date of enactment of this subsection1 the ,board1 the ,federal ,deposit ,insurance ,corporation1 the ,office of the ,comptroller of the ,currency1 and the ,national ,credit ,union ,administration shall promulgate final regulations implementing the requirements under paragraph 7#b71 including3 7,a7 ,asset thresholds for testing requirements 7i7 ,larger institutions ,for depository institutions having assets greater than #ajj1jjj1jjj1jjj1 mandatory testing shall be required not less frequently than quarterly1 on a schedule determined by the ,board4 7ii7 ,smaller institutions ,for depository institutions having assets not less than #aj1jjj1jjj1jjj and not greater than #ajj1jjj1jjj1jjj1 mandatory testing shall be required not less frequently than semiannually4 7,b7 ,variation of the schedule1 size1 and tenor of advances ,the regulations promulgated under this paragraph may provide for ,federal reserve banks to vary the size1 tenor1 and timing of advances required under this section if the ,board determines that-- 7i7 such variations would be effective1 particularly with respect to reducing stigma associated with advances under this section2 and 7ii7 after consultation with affected depository institutions1 such variations would not result in undue added operational burdens or costs4 7,c7 ,incorporation of mandatory testing into supervision ,the regulations promulgated under this paragraph shall require that each of the ,board1 the ,federal ,deposit ,insurance ,corporation1 the ,office of the ,comptroller of the ,currency1 and the ,national ,credit ,union ,administration-- 7i7 incorporate an assessment of the readiness of each depository institution to seek advances under this section into the examination activities of the agency with regard to liquidity risk management of the depository institution2 7ii7 provide that the regulations and supervisory standards of the agency with regard to liquidity provisioning shall give appropriate1 positive consideration to-- 7,i7 the ability of a depository institution to meet the requirements of the regulations promulgated under this paragraph2 and 7,,ii7 the ability of the depository institution to access liquidity through advances under this section1 including the pre-pledged collateral of the depository institution4 7,d7 ,reporting requirements for depository institutions ,the regulations promulgated under this paragraph shall require that-- 7i7 the management of each depository institution eligible to seek an advance under this section shall establish1 and the risk committee or equivalent body of the board of directors of the depository institution shall review and approve1 not less frequently than annually1 the liquidity risk management plans and operational readiness of the depository institution to execute such plans1 including detailed policies and procedures for seeking advances under this section2 and 7ii7 once approved1 the management described in paragraph 7,a7 shall submit to the ,board1 the ,federal reserve bank of which the depository institution is a member1 and the primary ,federal supervisor of the depository institution1 a report detailing the findings of the reviews required under that subparagraph4 7#d7 ,mandatory improvements to operations ,not later than #ahj days after the date of enactment of this subsection1 the ,board and the ,federal reserve banks shall implement improvements to advances under this section to ensure that depository institutions are able to access advances rapidly as needed1 including-- 7,a7 changes to operations for advances under this section and ,federal ,reserve payment services to ensure that a depository institution eligible to obtain advances under this section is able to obtain such advances until at least #h p4m4 each day in each relevant ,united ,states time zone2 7,b7 implementing a secure1 computer-based online access platform that depository institutions may use to obtain such advances1 including automating the process of primary credit approval if appropriate collateral is pledged2 7,c7 standardizing technical specifications and operational procedures for such advances across all ,federal reserve banks2 7,d7 implementing procedures for the consistent and efficient identification1 assignment1 and transfer of security interests in collateral that is pledged to secure borrowing between any ,federal ,home ,loan ,bank and any ,federal reserve bank2 7,e7 implementing simplified procedures for depository institutions to pledge small business loans as collateral for advances under this section1 with emphasis on simplified documentation for smaller institutions2 and 7,f7 creating and funding an outreach program to provide information and technical assistance to smaller institutions with regard to accessing advances under this section4 7#e7 ,harmonization ,not later than #bgj days after the date of enactment of this subsection1 the ,board1 in consultation with the ,federal ,housing ,finance ,administration and the ,federal ,home ,loan ,banks1 shall promulgate regulations or guidance simplifying and harmonizing1 to the greatest extent practicable1 policies and procedures for the pledging of collateral for advances under this section1 including for the timely and efficient transfer of collateral between ,federal ,home ,loan ,banks and ,federal reserve banks4 7#f7 ,federal reserve reporting 7,a7 ,review ,not later than #bgj days after the date of enactment of this subsection1 the ,board shall comprehensively review the weekly reporting of its balance sheet1 including advances under this section1 and consider changes to reduce the risk of market distortions caused by speculative activity regarding such advances1 giving particular consideration to-- 7i7 the breakdown of balance sheet data by district and the manner in which such reporting may contribute to speculative activity that threatens the stability of individual depository institutions2 and 7ii7 the effects of disclosure requirements described in section #aa7s74 7,b7 ,revised reporting methodology ,not later than #ij days after the date on which the review required under subparagraph 7,a7 is completed1 the ,board shall revise reporting policies as appropriate to address the findings of such review1 and if necessary make recommendations to the appropriate congressional committees regarding potential statutory changes4 7#g7 ,study ,not later than #a year after the date of enactment of this subsection1 the ,board1 in consultation with the ,comptroller of the ,currency1 the ,federal ,deposit ,insurance ,corporation1 and the ,national ,credit ,union ,administration1 shall complete a study and submit to the appropriate congressional committees a report on additional measures that could be undertaken to reduce the stigma and otherwise improve the process for advances under this section1 including-- 7,a7 the pricing and other terms of such advances1 especially as they compare to alternative liquidity sources2 7,b7 the costs and benefits of any other relevant operational or policy changes2 and 7,c7 recommendations to the appropriate congressional committees regarding any statutory changes necessary to reduce the stigma associated with1 and otherwise improve the process for1 such advances4 4