FDICIA's Discount Window Provisions

On December 19, 1991, President Bush signed into law the Federal Deposit Insurance Corporation Improvement Act (FDIC1A), which Congress passed to address problems it saw in the supervision of federally insured banks. An important component of FD1CIA that has already received substantial public attention is the set of provisions detailing a new process for prompt corrective supervisory action against undercapitalized banks. Much more obscure, though perhaps as innovative, are the sections of the legislation that modify the terms and conditions under which the Federal Reserve Banks may lend to troubled banks at the discount window.