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118TH CONGRESS
1ST SESSION H. R. 3242
To amend the Federal Reserve Act to establish a permanent Bank Term
Funding Program to provide member banks and other depository institu-
tions with short-term liquidity against long-term assets.
IN THE HOUSE OF REPRESENTATIVES
MAY 11, 2023
Mr. LUETKEMEYER introduced the following bill; which was referred to the
Committee on Financial Services
A BILL
To amend the Federal Reserve Act to establish a permanent
Bank Term Funding Program to provide member banks
and other depository institutions with short-term liquid-
ity against long-term assets.
Be it enacted by the Senate and House of Representa-
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tives of the United States of America in Congress assembled,
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SECTION 1. FEDERAL RESERVE BANK TERM FUNDING PRO-
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GRAM.
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The Federal Reserve Act (12 U.S.C. 221 et seq.) is
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amended by inserting after section 10B the following:
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•HR 3242 IH
‘‘SEC. 10C. BANK TERM FUNDING PROGRAM.
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‘‘(a) IN GENERAL.—There is established a Bank
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Term Funding Program, under which a Federal reserve
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bank may, subject to rules established by the Board of
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Governors of the Federal Reserve System, make advances
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to eligible borrowers, subject to eligible collateral pledged
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by an eligible borrower.
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‘‘(b) PROGRAM REQUIREMENTS.—In making ad-
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vances under the Bank Term Funding Program—
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‘‘(1) advances may only be made in an amount
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up to the amount of the eligible collateral pledged,
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but advances shall be made with recourse beyond the
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pledged collateral;
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‘‘(2) advances shall be made at a fixed rate
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equal to the one-year overnight index swap rate plus
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10 basis points, as of the day the advance is made;
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‘‘(3) collateral shall be valued at par value and
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margin shall be 100 percent of par value;
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‘‘(4) borrowers shall be allowed to prepay with-
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out penalty;
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‘‘(5) advances shall be made available with a
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term of up to 1 year; and
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‘‘(6) a Federal reserve bank may not charge the
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borrower a fee.
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‘‘(c) DEFINITIONS.—In this section:
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•HR 3242 IH
‘‘(1) ELIGIBLE BORROWER.—The term ‘eligible
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borrower’ means any U.S. federally-insured bank,
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savings association, or credit union or a U.S. branch
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or agency of a foreign bank that is eligible for pri-
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mary credit (as defined under section 201.4(a) of
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title 12, Code of Federal Regulations).
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‘‘(2) ELIGIBLE COLLATERAL.—The term ‘eligi-
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ble collateral’ includes any collateral eligible for pur-
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chase by the Federal reserve banks in open market
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operations (as described under section 201.108(b) of
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title 12, Code of Federal Regulations).’’.
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