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Fed’s Direct Loans to Banks Climb to Record Level
The Federal Reserve’s direct loans of cash to commercial banks climbed to the highest level on record in the past week as money-losing lenders increasingly turn to the central bank for funds. Funds provided through the so-called discount window for banks rose by $2.8 billion to a daily average of $14.4 billion in the week to May 14, the central bank said today in Washington. Separately, the Fed’s loans to Wall Street bond dealers rose by $75 million to $16.6 billion. Policy makers have increased the attractiveness of direct loans as they seek to alleviate the impact of the credit crunch. Fed Chairman Ben S. Bernanke said two days ago that while markets have improved, they remain “far from normal,” adding that the central bank is prepared to increase its twice monthly auctions of funds to banks.