Banks "quietly" borrow $50 billion from Fed: report

NEW YORK Tue Feb 19, 2008 5:47am EST

A wintry sky hangs over the Federal Reserve Building in Washington January 22, 2008. Banks in the United States have been quietly borrowing ''massive amounts'' from the U.S. Federal Reserve in recent weeks, using a new measure the Fed introduced two months ago to help ease the credit crunch, according to a report on the web site of The Financial Times. REUTERS/Kevin Lamarque

A wintry sky hangs over the Federal Reserve Building in Washington January 22, 2008. Banks in the United States have been quietly borrowing ''massive amounts'' from the U.S. Federal Reserve in recent weeks, using a new measure the Fed introduced two months ago to help ease the credit crunch, according to a report on the web site of The Financial Times.

Credit: Reuters/Kevin Lamarque

NEW YORK (Reuters) - Banks in the United States have been quietly borrowing "massive amounts" from the U.S. Federal Reserve in recent weeks, using a new measure the Fed introduced two months ago to help ease the credit crunch, according to a report on the web site of The Financial Times.

The newspaper said the use of the Fed's Term Auction Facility (TAF), which allows banks to borrow at relatively attractive rates against a wide range of their assets, saw borrowing of nearly $50 billion of one-month funds from the Fed by mid-February.

The Financial Times said the move has sparked unease among some analysts about the stress developing in opaque corners of the U.S. banking system and the banks' growing reliance on indirect forms of government support.

(Reporting by Mark McSherry; Editing by Valerie Lee)

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