Fed to name banks that took crisis loans
Steve Chiotakis: In a little more than an hour, the Federal Reserve will release the names of banks that borrowed money during the financial crisis from something called the discount window.
Marketplace’s Jennifer Collins reports.
Jennifer Collins: Maybe you’ve heard the Fed called the “lender of last resort?” When a bank has no other option, says University of Chicago professor Anil Kashyap, it shows up at the Fed’s discount window.
Anil Kashyap: The discount window has historically been the place where you could go in the United States if you’re a bank to temporarily borrow.
But “going to the window” comes with a stigma — kind of like eating at a soup kitchen.
Kashyap: That led people not to want to use it very much, even if they might have needed to.
And in 2008, a lot of banks needed money — and fast. The Fed kept their names quiet to get them to take the cash. Morris Davis is an economics professor at the University of Wisconsin.
Morris Davis: I would not be surprised to see every major market participant either voluntarily or been forced to take some of these loans.
The names on the list today may look familiar. And expect to see more reports like this. New financial regulations require the Fed to disclose the names of visitors to the window — after a two-year lag.
I’m Jennifer Collins for Marketplace.
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