Cash-short banks have borrowed about US$300 billion from the Federal Reserve in the past week, the central bank announced Thursday.
Nearly half the money -- US$143 billion -- went to holding companies for two major banks that failed over the past week, Silicon Valley Bank and Signature Bank, triggering widespread alarm in financial markets. The Fed did not identify the banks that received the other half of the funding or say how many of them did so.
The rest of the money was borrowed by banks seeking to raise cash -- likely, at least in part, to pay off depositors who tried to withdraw their money. Many mega banks, such as Bank of America, have reported receiving inflows of funds from smaller banks since the bank failures last weekend. Michael Feroli, an economist at JPMorgan Chase, said in research note that the Fed's assistance is, so far, about half what it was during the financial crisis 15 years ago.
Over the past year, as the Fed steadily raised its benchmark interest rate, yields on longer-term Treasurys and other bonds rose. That, in turn, reduced the value of the lower-yielding Treasurys that the banks held.
France Dernières Nouvelles, France Actualités
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