The amount of money U.S. banks borrowed from the Federal Reserve fell by almost half last week, mostly because of the distressed sale of First Republic.
Before its sale to JP Morgan Chase last weekend, First Republic had been one of the biggest borrowers from the Fed, data from a weekly Fed survey indicates. The bank’s assets were sold to JP Morgan after its stock sank and depositors started to pull their money.Before its sale to JP Morgan Chase last weekend, First Republic had been one of the biggest borrowers from the Fed, data from a weekly Fed survey indicates.
Total bank borrowing sank to $81 billion in the seven days ending May 3 from $155.2 billion in the prior week. “After accounting for First Republic, Fed lending was close to unchanged, implying aggregate bank liquidity needs were stable despite renewed concern in equity markets,” economists at Citibank said in a note to clients.
First Republic was among a number of small to midsize banks that have borrowed from an emergency program set up by the Fed to prevent failures and stabilize the U.S. financial system. The Fed created the new lending mechanism after the demise of Silicon Valley Bank in early March.
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