Banks borrow record amount from Fed
Banks borrowed in record amounts from the Federal Reserve's emergency lending facility over the past week, while investment banks drew loans at a brisk — though slightly lower — pace, fresh proof of the credit problems gripping the country.
The Fed's report released Thursday said commercial banks averaged a record $75 billion in daily borrowing over the past week. That surpassed the old record — a daily average of $44.5 billion — logged in the previous week. On Wednesday alone, $98 billion was drawn, an all-time high.
For the week ending Wednesday, investment firms drew $134 billion. That was down from a record $147.7 billion in the previous week. This category was broadened last week to include any loans that were made to the U.S. and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch.
The Fed report also showed that over the last week $145.9 billion worth of loans were made to money market mutual funds — via banks — to help the funds, which have been under pressure as skittish investors demand withdrawals.
Squeezed banks and investment firms are borrowing from the Fed because they can't get money elsewhere. Skittish investors have cut them off, moving their money into safer Treasury securities. Financial institutions are hoarding whatever cash they have, rather than lend it to each other or customers.
The report also showed that the Fed has loaned $70.3 billion to insurance giant American International Group. In mid-September, the Fed said it would provide the troubled company a two-year, $85 billion loan. On Wednesday the central bank said it would loan the company an additional $37.8 billion.
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Member Comments
Posted By: josephjsalas @ 03/21/2008 3:51:42 PM
Comment: "Quit beating arround the BUSH! Everybody knows the little people base their decisions upon the DJI
ticker. Everyone should know by now that the DJI is based upon Banking and Oil! So between the
Iraq war and the Fed supplying the crutch needed for the big banks, eveyone should know that
Wall Street and the Dollar are both backed and produced by green ink and liquid crystal!
Posted By: tired and old @ 03/17/2008 1:25:03 PM
Comment: It is a real joy to hear that the government wants to bring calm to the stock market ?
I only wish that I had enought money to purchase a stock certificate. Unfortunately my money seems to be in short supply. I think it is important to have food to eat, taxes to pay, propane to buy, fuel to purchase.
Where has the government been as my expenses continued to grow ?
In the Bush years food has tripled, gasoline has tripled, and propane tripled.
President Bush thank you for caring about that which I can't afford. I hope you have lots of fun counting your millions after retiring from government; just, like Bill Clinton.
Posted By: C. MacLean @ 03/17/2008 11:33:47 AM
Comment: Well, well, well. I thought the republicans were the party of less government interference, but amazingly, when it comes down to money, they somehow manage to take care of their own.
And at this point, they had no choice - the alternative, to allow Bear Stearns to collapse, was unthinkable.
But by all means, let's continue to maintain tax cuts for the rich while we make paupers of the middle class. By all means, let's continue to insist we are a society based on capitalism and consumerism but send our jobs overseas. (Tough to tax the middle class if they aren't employed, huh?)
And by all means, let's continue to pour more money into the Middle East and the military, draining our coffers at home, so we can continue to prop up Big Oil - the people who brought you record profits even as gas climbs to $4/gallon and beyond.
George Bush says, "we have taken strong, decisive action." No, George. Strong decisive action would have been avoiding going to war against an oil producing nation. Strong decisive action would have been to figure out how to balance the budget. Strong decisive action would have been to show some backbone and leadership.
January 21, 2009 can't come soon enough.