Boston Globe - "Lined up for Fed handout" (Via LRC): "Normally, this would be toxic news for the banks that have borrowed a few billion between them. The discount window is usually a place where desperate banks go when they have nowhere else to turn. It is the place where you don't want to be seen.
Not so this week. A couple of days ago, Deutsche Bank was identified in print as a discount-window borrower. Then Citigroup put out a statement yesterday confirming it too had borrowed $500 million in a similar fashion. Within minutes, Bank of America Corp., Wachovia Corp., and JPMorgan Chase & Co. did the same.
This was nothing dire. The banks were marching to the beat of the Federal Reserve, which had lowered the discount rate last week as a way of easing the market's growing credit crisis. Those institutions borrowed money via the discount window to make it available to customers who might otherwise get stuck if they relied on markets to refinance short-term debt.
The banks don't appear to need the money, and they have cheaper places to go for cash. To their credit, big commercial banks got in step with the Fed to be part of the solution to a serious financial problem. Their leadership was intended to encourage other banks to do the same as necessary.
The great irony of that lies in the root of the problem itself, the subprime debt fiasco and the fear that spread into other kinds of credit markets.(...)"
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