The Federal Reserve’s (Fed) emergency loan to financial institutions dropped significantly last week, in part because First Republic Bank. Which makes up a sizable amount of the outstanding loans, was acquired. According to information provided on Thursday.
The Federal Reserve’s outstanding loan to financial institutions under its 2 backup lending facilities decreased from $155.2 billion the week before to $81.1 billion in the week ending May 3. Since the start of the banking crisis in March, the most recent data were the lowest.
This week, shares of several local banks fell as a result of rumours that they might be considering selling. After First Republic Bank was taken over & then sold on Monday. Investor worries about the banking crisis spreading to mid-size banks increased.
According to the Fed’s weekly balances sheets data, the amount of outstanding borrowing via the discount window.
The typical backstop lending programme, was $5.3 billion as opposed to a record $152.9 billion last month. And $73.9 billion the week before.
The demands for new Bank Term Funding Programmes (BTFP) decreased as well, dropping from $81.3 billion last week to $75.8 billion.
The Fed reported that the total amount of loans made to First Republic Bank under the bank’s discount window and term funding programme.
Now categorised as “other credit,” increased from $170.4 billion the previously week to $228.2 billion. Loans given to banks that the FDIC has taken over, such as Silicon Valley Bank & Signature Bank, are included in this category.
It is important to note that First Republic Bank reported that as of April 28. It had $93.2 billion in outstanding borrowing from the Federal Reserve when California regulators assumed control of the bank.
Policymakers are increasingly worried about how the financial instability may affect lending and the overall economy.