Federal Reserve Issues Final Rule on Emergency Lending (CRS Report for Congress)
| Release Date |
Jan. 6, 2016 |
| Report Number |
IN10426 |
| Report Type |
Insight |
| Authors |
Labonte, Marc;Murphy, M. Maureen |
| Source Agency |
Congressional Research Service |
Summary:
On November 30, 2015, the Federal Reserve (Fed) issued final regulations governing emergency lending under Section 13(3) of the Federal Reserve Act and implementing Section 1101 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank). In response to comments received during the rulemaking process which criticized the proposed rules as lacking limits and meaningful definitions, the final regulations provide certain limits on the Fed's discretion under Section 13(3) that did not appear in the 2013 proposed regulations. The final rule implements the Dodd-Frank requirement that Section 13(3) lending provide liquidity to the entire financial system, as opposed to assisting individual distressed institutions. Nevertheless, House Financial Services Committee Chairman Jeb Hensarling issued a press release decrying the final rule as 'leaving the door wide open to future taxpayer-funded bailouts.' H.R. 3189, as passed by the House on November 11, 2015, H.R. 2625, and S. 1320 would further curtail the Fed's flexibility under Section 13(3).
