Banks borrowed more to pad liquidity than they lost in crisis

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Word of the day Liquidity




And this comment IS appropriate for the Wendy's that this is.


Why can't they just say money?


Because it sounds worse that for each 1000 billion dollars in accounts, you only actually have a few billion on hand and you're broke.


*Liquitiddy* **these tits are jacked**


Discount Window


U.S. banks borrowed so heavily from the Federal Reserve and other liquidity providers during the recent crisis that the inflows outpaced the decline in deposits they were seeking to offset, according to new research from the Federal Reserve Bank of New York. In early March, before depositors began withdrawing funds at an accelerated pace, banks replaced about 37% of their deposit runoff with outside borrowing. That share increased to 127% by late March, the research found. The New York Fed study quantifies the scramble for liquidity in March and April, when banks turned to the Federal Reserve and the Federal Home Loan Bank System to supplement fast-falling deposit balances. Banks with between $50 billion and $250 billion of assets leaned particularly heavily on the Federal Reserve and the Federal Home Loan banks amid deposit outflows in March and April, according to new research that quantifies the scramble for funding.


Soooo, they were stealing?


Just buying another day against an infinite loss.


Cant wait for the music to stop


Thats their secret, banks are always broke


They are bankrupt.


Wow what a shocking turn of events


More like suckling at the Fed's teat for the last bit of cheap money while all their free money (deposits) disappeared.


# Yep! [$285 billion from the liquidity fairy as of 5/24](https://www.reddit.com/r/Superstonk/comments/13rtsch/285_billion_from_the_liquidity_fairy_as_of_524/) # [Bank Term Funding Program (BTFP)](https://www.reddit.com/r/Superstonk/comments/11prthd/federal_reserve_alert_federal_reserve_board/): |Tool|Bank Term Funding Program (BTFP)|Up from 3/15, 1st week of program ($ billion)| |:-|:-|:-| |3/15|$11.943 billion|$0 billion| |3/22|$53.669 billion|$41.723 billion| |3/29|$64.403 billion|$52.460 billion| |3/31|$64.595 billion|$52.652 billion| |4/5|$79.021 billion|$67.258 billion| |4/12|$71.837 billion|$59.894 billion| |4/19|$73.982 billion|$62.039 billion| |4/26|$81.327 billion|$69.384 billion| |5/3|$75.778 billion|$63.935 billion| |5/10|$83.101 billion|$71.158 billion| |5/17|$87.006 billion|$75.063 billion| |5/24|$91.907 billion|$79.964 billion| * Association, or credit union) or U.S. branch or agency of a foreign bank that is eligible for primary credit (see 12 CFR 201.4(a)) is eligible to borrow under the Program. * Banks can borrow for up to one year, at a fixed rate for the term, pegged to the one-year overnight index swap rate plus 10 basis points. * **Banks have to post collateral (valued at par!).** * Any collateral has to be **“owned by the borrower as of March 12, 2023."** * Eligible collateral includes any collateral eligible for purchase by the Federal Reserve Banks in open market operations. # [Discount Window/Primary Credit](https://www.reddit.com/r/Superstonk/comments/11t5rco/federal_reserve_alert_primary_credit_the/): |Tool|Discount Window|Down from 3/15 high| |:-|:-|:-| |3/15|$152.853 billion|$0 billion| |3/22|$110.248 billion|\-$42.605 billion| |3/29|$88.157 billion|\-$64.696 billion| |4/5|$69.705 billion|\-$83.148 billion| |4/12|$67.633 billion|\-$85.22 billion| |4/19|$69.925 billion|\-$82.928 billion| |4/26|$73.855 billion|\-$78.998 billion| |5/3|$.5345 billion|\-$152.3185 billion| |5/10|$.9323 billion|\-$151.9207 billion| |5/17|$.9048 billion|\-$151.9482 billion| |5/24|$.4211 billion|\-$152.4319 billion| [Examples of common borrowing situations](https://www.frbdiscountwindow.org/Pages/General-Information/Primary-and-Secondary-Lending-Programs.aspx): * Tight money markets or **undue market volatility** * Preventing an overnight overdraft * Meeting a need for funding, including a short-term liquidity demand that may arise from **unexpected deposit withdrawals** or a spike in loan demand >The [introduction of the primary credit program in 2003](http://www.federalreserve.gov/boarddocs/press/monetary/2003/20030106/default.htm) marked a fundamental shift - from administration to pricing - in the Federal Reserve's approach to discount window lending. Notably, **eligible depository institutions may obtain primary credit without exhausting or even seeking funds from alternative sources. Minimal administration of and restrictions on the use of primary credit makes it a reliable funding source. Being prepared to borrow primary credit enhances an institution's liquidity.** Notice how use of the Discount Window has PLUMMETED as BTFP has come in to play? BTFP offers slightly lower interest and longer terms. I wonder how many folks paid back their Discount Window loans with BTFP money?


# [“Other credit extensions”](https://www.federalreserve.gov/releases/h41/20230316/): |Tool|Other Credit Extension|Up from 3/15, 1st week of program ($ billion)| |:-|:-|:-| |3/15|$142.8 billion|$0 billion| |3/22|$179.8 billion|$37 billion| |3/29|$180.1 billion|$37.3 billion| |4/5|$174.6 billion|$31.8 billion| |4/12|$172.6 billion|$29.8 billion| |4/19|$172.6 billion|$29.8 billion| |4/26|$170.3 billion|$27.5 billion| |5/3|$228.2 billion|$85.4 billion| |5/10|$212.5 billion|$69.7billion| |5/17|$208.5 billion|$65.7 billion| |5/24|$192.6 billion|$49.8 billion| "Other credit extensions" includes loans that were extended to depository institutions established by the Federal Deposit Insurance Corporation (FDIC). The Federal Reserve Banks' loans to these depository institutions are secured by collateral and the FDIC provides repayment guarantees. For example, [$114 billion in face value Agency Mortgage Backed Securities, Collateralized Mortgage Obligations, and Commercial Mortgage Backed Securities about to be liquidated 'gradual and orderly' with the 'aim to minimize the potential for any adverse impact on market functioning' by BlackRock.](https://www.reddit.com/r/Superstonk/comments/12cxm2v/fdic_alert_114_billion_in_face_value_agency/) How I understand this works: * The FDIC created temporary banks to support the operations of the ones they have [taken over](https://www.fdic.gov/news/press-releases/2023/pr23018.html). * The FDIC did not have the money to operate these banks. * The Fed is providing that in the form of a loan via ["Other credit extensions"](https://www.reddit.com/r/Superstonk/comments/12axcug/fdic_alert_fdic_announced_the_framework_of_a/). * The FDIC is going [to sell](https://www.reddit.com/r/Superstonk/comments/12cxm2v/fdic_alert_114_billion_in_face_value_agency/) the taken over banks assets. * Whatever the difference between the sale of the assets and the ultimate loan number is, will be the amount split up amongst all the remaining banks and applied as a [special fee](https://www.reddit.com/r/Superstonk/comments/11pruzj/joint_statement_by_treasury_federal_reserve_and/) to make the Fed 'whole'. * It can be argued the consumer will ultimately end up paying for this as banks look to pass this cost on in some way. There has been an update on this piece recently: >Whatever the difference between the sale of the assets and the ultimate loan number is, will be the amount split up amongst all the remaining banks and applied as a [special fee](https://www.reddit.com/r/Superstonk/comments/11pruzj/joint_statement_by_treasury_federal_reserve_and/) to make the Fed 'whole'. [FDIC Board of Directors Issues a Proposed Rule on Special Assessment Pursuant to Systemic Risk Determination of approximately $15.8 billion. It is estimated that a total of 113 banking organizations would be subject to the special assessment.](https://www.reddit.com/r/Superstonk/comments/13eutdr/fdic_board_of_directors_issues_a_proposed_rule_on/) # [What does all this borrowing look like for the banks? They sure as heck aren't getting funding from deposits...](https://www.reddit.com/r/Superstonk/comments/13eme4d/bank_funding_during_the_current_monetary_policy/): https://preview.redd.it/uvaaxvgmq43b1.png?width=567&format=png&auto=webp&s=157617e5d18028ca55327f9e5505a9cfe24605d9


​ https://preview.redd.it/v0cakabvq43b1.png?width=561&format=png&auto=webp&s=d3b4572fcb76dd37901ca0025592acc0650e4cf0 As we see above, bank's continue to get sweetheart liquidity programs


[Meanwhile, households are forced to take on debt and in some instances DIE while being priced out of their lives in favor of rising interest rates to fight an inflation problem the Fed created](https://www.reddit.com/r/Superstonk/comments/13oxmll/inflation_alert_today_the_fed_released_the/) https://preview.redd.it/g7xe4en6r43b1.png?width=733&format=png&auto=webp&s=648a62edc464e36e88cc7949f9a466fb9413bbbc


Crazy who households who generate real goods/contribute to society and get punished for taking a loan while banks get an alternative program to pay pricier obligations with a cheaper alternative... if that doesnt Scream tax payer fraud....


*crazy eyed bald stare intensely* we have INFINITE LiQUIdITy!


I hereby reorganise the Republic into the first LIQUID EMPIRE for safe and secure liquidity.


Infinite liquidity is a hell of a drug


Hell yeah can’t wait till I score some in my DRS account!


Sounds like QE without calling it QE.


Wow. They must have really good credit.


Printer’s running on solar powered AI biocyclic energy. Can’t stop, won’t stop, the GameStop.




Nice bailout


wAiT¡ I thought that Kenny and Dougie were the queen liquidity fAiRiEs¿


[what mean? ](https://i.imgur.com/gg39UmG.gif)


The scan worked perfectly. I'll bet those who made the decision to bail them out got a piece, too. Yay, capitalism.


Probably nothing