No Bailout? Banks Borrow $164.8 Billion From Fed in Rush to Backstop Liquidity

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The recent week witnessed a heightened level of funding stress after Silicon Valley Bank’s collapse, as evidenced by the $164.8 billion borrowed by banks from two Federal Reserve backstop facilities.

According to information released by the Fed, in the week ended March 15, borrowing from the discount window, which is the conventional source of liquidity for banks, reached an all-time high of $152.85 billion, up from the previous week’s $4.58 billion.

The previous record high of $111 billion was observed during the 2008 financial crisis, Yahoo News reported per Bloomberg.

Additionally, the information indicated that borrowing from the newly introduced emergency backstop by the Fed, called the Bank Term Funding Program, reached $11.9 billion. The program was launched on Sunday.

The combined credit provided by the two backstops indicates that the banking system is currently vulnerable and grappling with the migration of deposits following the recent collapses of California’s Silicon Valley Bank and New York’s Signature Bank.

During the week, there were other credit extensions amounting to $142.8 billion, which primarily represented loans given by the Federal Deposit Insurance Corp. to bridge banks for Silicon Valley Bank and Signature Bank.

Written by staff