Upcoming: hearings by the House Domestic Monetary Policy Subcommittee discount window lending practices by the Fed.
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Lending at the discount window is supposed to be penal to discourage its use.
Borrowings from the discount window for the last week are to be released Thursday evening.
The Fed also lowered its emergency discount window lending rate to 1.25%, from 1.75%, on Wednesday.
How many policy analysts today would phase out deposit insurance, the discount window, or the TBTF doctrine?
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All this is interesting in the context of a 2007 Fed effort to destigmatize discount window lending.
Having the certainty of discount window access is exactly why the biggest commercial banks are the biggest swaps dealers.
Last week the Fed issued an unusual statement reminding banks that the discount window is there for them to use.
If any further action is needed, it's possible the Federal Reserve could open its discount window to the mortgage buyers.
It will be made easier for them to gain access to the Fed's discount window if they need emergency funds.
When banks stopped lending to each other overnight altogether in the fall of 2008, discount window borrowing became even more crucial.
The Federal Reserve is preparing to narrow this spread, first by raising the rate it charges on loans through its discount window.
The access to the Fed's discount window is, after all, only temporary.
Banks were reluctant to go to the discount window at first, but borrowing had picked up by mid-September as necessity outweighed stigma.
Another idea would be to allow Countrywide access to the Fed's discount window, which is the banking system's last resort when funds are needed.
To break this vicious circle, the Fed last year instituted its term auction facility, as an alternative to loans from the so-called discount window.
The Fed even narrowed the penalty banks paid for using discount window money, moving the discount rate closer to the Federal funds rate during the crisis.
In addition, there has always been an onus on discount window borrowings, which imply that banks can't get the short-term funds they need from other banks.
It used to be considered bad form to have to tap the Fed's discount window, where rates are about one point over the federal funds rate, or 6.25%.
Bear Stearns was not a bank, could not borrow from the Fed's discount window and wasn't even all that big, yet the government still wouldn't let it fail.
Bear Stearns is not technically a bank, but the Fed's move to allow it access to the discount window shows just how complex and intertwined the financial world has become.
Sure enough, the Fed's actions Sunday, including lowering the rate it charges banks to lend directly from it and opening its discount window to Wall Street brokerages, didn't save Bear Stearns from collapse.
Investment banks face the potential of losing access to the Federal Reserve's discount window on Sept. 14, which is the earliest the central bank said it would consider whether to continue to allow the access.
In the depths of the 2007-08 financial crisis, the Federal Reserve urged the biggest banks to step up to its discount window, pushing the industry to get over the stigma on borrowing from the Fed.
The Fed has tried to pump money into the banking system to break the log jam, first by opening up its discount window to deposit banks and then by inventing a new term auction program for them.
Some of the new Fed-established lending facilities to deal with the recent credit liquidity crisis may become permanent or left in place until the situation improves, but that "we haven't decided yet" about the Fed's discount window's permanence.
Their most telling gripe: If the Fed had opened the discount window to the investment banks on Thursday, March 13, instead of Monday, March 17, might Bear have been able to get the transfusion it need to keep its doors open?
Banks benefiting from their FDIC backing and ability to access the Federal Reserve's discount window will be required to curb their speculative activity, while those that do not receive explicit government aid will be free to take big risks as well as fail.
Bear Stearns, one of the five big Wall Street brokerages and among the biggest players in the once high-flying mortgage business, had to resort to a rescue Friday by the Federal Reserve, using JPMorgan Chase as its open door to the Fed's discount window.
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