The Federal Reserve is gathering public input on how to improve
The central bank launched a request for information on Thursday, asking the public to weigh in on
Specifically, the Fed is seeking input on operational practices such as the collection of legal documents, pledging — and withdrawing — collateral, and requesting, receiving and repaying loans from the facility. It has also invited commentary about its intraday credit program and related communications.
Banks and members of the public have 90 days to respond to the request for information.
According to post-failure reports, staffers from both Silicon Valley Bank and Signature Bank struggled to pledge appropriate collateral to the facility in a timely manner while facing significant deposit outflows in March 2023. The employees had difficulties moving assets that were prepositioned with the Federal Home Loan Banks — a more frequent source of liquidity for banks — and even attempted to post ineligible loans.
While smoother experiences at the discount window would not have helped the banks stave off failure, government examiners concluded, they might have allowed for more orderly liquidations of the institutions.
In response to the episode, regulators issued joint guidance on
In March,
Acting Comptroller of the Currency Michael Hsu,
But not all regulators are sold on the idea. Fed Gov.
"While it may be appropriate for supervisors to encourage banks to test contingency funding plans and to evaluate whether those plans are adequate in the context of examination, we must be cautious to not cross the line from supervisor to member of the management team and to avoid interfering with the decision making of bank management by mandating across-the-board changes in response to the failure of a single unique institution," Bowman said in a speech.