The central bank has lent about half as much as it provided during the 2008 crisis as banks rush to shore up their financials
The holding companies for the two failed banks were set up by the Federal Deposit Insurance Corporation , which has taken over both banks. The money they borrowed was used to pay their uninsured depositors, with bonds owned by both banks posted as collateral. The FDIC has guaranteed the repayment of the loans, the Fed said.
An additional $153bn in borrowing from the Fed over the past week came through a longstanding program called the “discount window”; it amounted to a record level for that program. Banks can borrow from the discount window for up to 90 days. Typically in a given week, only about $4bn to $5bn is borrowed through this program.
“But it is still a big number,” he said. “The glass half-empty view is that banks need a lot of money. The glass half-full take is that the system is working as intended.”
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