Banks must prove they can borrow in a crisis—and the Fed must make it easier.

What it does

This bill requires all U.S. banks and credit unions to regularly test their ability to borrow from the Federal Reserve's discount window—a backstop lending facility meant for emergencies. Large banks (over $100 billion in assets) must test quarterly; mid-size banks ($10–100 billion) must test twice yearly. The Federal Reserve must also upgrade its systems to make borrowing faster, easier, and less stigmatized, and study ways to further reduce the shame banks feel when using this emergency tool.

Why we flagged it

The bill's core mechanism is a regulatory requirement for banks to demonstrate operational readiness to access emergency Federal Reserve lending. It is fundamentally a stress-testing and operational-preparedness measure, not a subsidy, deregulation, or narrow carve-out.

What the text implies

• Quarterly testing for large banks may create a de facto normalization of discount window borrowing, potentially reducing the stigma that currently deters banks from using it during crises—a stated goal, but one that could shift market expectations about when banks are under stress.
• The requirement to harmonize collateral procedures across Federal Home Loan Banks and Federal Reserve banks may reduce friction in liquidity markets, benefiting mid-size and smaller banks that have historically faced higher operational barriers to emergency borrowing.

The full analysis lists 4 implications of this text.

Who stands to gain

mid-size and smaller depository institutions (reduced operational barriers to emergency liquidity); credit unions (explicit inclusion in testing requirements and outreach); Federal Reserve banks (operational improvements funded by the bill)