Banks borrowed a record $165 billion from the Fed after the Silicon Valley Bank collapse
U.S. banks took out combined loans of $164.8 billion from two Federal Reserve institutions over the past two weeks, according to Fed statistics released Thursday. It came as lenders rushed to secure liquidity in the event of a bank run following the collapse of Silicon Valley Bank.
According to the data, U.S. lenders borrowed $152.85 billion from the discount window in the week ending March 15, up from $4.58 billion the previous week. This figure, which marks an all-time high, surpassed a record set during the 2008 financial crisis.
The borrowing came through the Fed’s Discount Window, which is a tool through which the Fed provides liquidity to banks in the form of loans against safe collateral for up to 90 days. U.S. lenders also secured an additional $11.9 billion in loans through the Fed’s Bank Term Funding Program, a facility launched in the wake of the SVB’s collapse and under which funding is available for up to one year.
Earlier this week, the Financial Times reported that Wall Street’s six major banks had lost about $165 billion in market capitalization this month, or about 13% of their combined value, following the fallout from the most major US bank failure since 2008.
Last week, SVB, which focused on the tech and startup sectors, was shut down by US financial authorities, triggering a crisis in the sector. This followed the liquidation of California-based, crypto-focused Silvergate and New York-based Signature Bank.
The Fed report did not specify the exact number of banks or the identity of the institutions that obtained the funding. Meanwhile, US banking majors gave no indication that they were facing solvency problems.
Earlier this week, US President Joe Biden assured that the US banking system remains safe and that the government will “everything that’s necessary” to protect it against a generalized crisis.
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