Bankruptcy

Loans From Fed Hit an all Time High

By J. Michael McBride

The Federal reserve has been “opening the window” more and more over the past 6 months. Now banks and brokerage firms are taking full advantage of these low interest loans. (Whether they are lending any money as a result of the loans is another story.)

“The Fed's report, released Thursday, showed commercial banks averaged a record $105.8 billion in daily borrowing over the past week. That surpassed the old record - a daily average of $99.7 billion - from the prior week. On Wednesday alone, $107.5 billion was drawn, an all-time high.

For the week ending Wednesday, investment firms drew $111.3 billion. That was down from $131 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 (MS) and Merrill Lynch.

The Fed report also showed that over the last week $114.2 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. The Fed announced a new effort earlier this week to help shore up mutual funds.”

http://apnews.myway.com/article/20081023/D940EC681.html

Michael

Full post as published by Texas Lawyer Blog on October 24, 2008 (boomark / email).