ICBA tells Fed to improve discount window, protect FHLBs

The Federal Reserve should embrace technology to improve its discount window and preserve the role of the Federal Home Loan Banks in providing liquidity, ICBA told the agency.

Discount Window Issues: In a comment letter responding to the Fed’s request for information on the operational aspects of the discount window, ICBA said community bankers have reported confusion surrounding asset pledges, transactions dependent on phone communication, and lack of quality customer service, flexibility, and dependable technology alternatives for borrowing.

Recommendations: ICBA recommended that the Fed fully embrace technology to manage discount window advances, dedicate more resources to answer banker questions and concerns, improve user experience, and properly staff call centers.

More: In a separate comment letter responding to the Fed’s RFI, ICBA outlined the critical importance of the FHLBs as reliable and efficient sources of liquidity for community banks, adding that it strongly opposes any efforts to undermine or devalue FHLBs or to steer banks away from FHLB advances. ICBA also called for better coordination of discount window and FHLB resources.

ICBA View: In a recent Independent Banker article, ICBA urged the agencies not to fix what isn’t broken with the FHLBs, saying that any attempts to block community banks’ access to funding will cause more harm than good. In an American Banker op-ed (subscription required), ICBA President and CEO Rebeca Romero Rainey said any regulatory crackdown on the FHLBs threatens the housing finance system at a time of high prices and limited supply.