(Recasts; adds details)
NEW YORK Jan 3 U.S. banks' direct borrowings
from the Federal Reserve for the week ended Wednesday surged to
the largest amount since the week shortly after the Sept 11,
2001 attacks, data from the U.S. central bank showed on
Primary credit borrowings at the Fed's discount window
totaled $5.770 billion for the week ended Jan. 2. That was the
largest weekly amount since the week of Sept. 12, 2001, when it
hit $11.742 billion.
Overall discount window borrowing averaged $5.787 billion a
day in the week ended Jan. 2, also the largest since the week
of Sept. 12, 2001, when it averaged $11.47 billion.
Data also showed that New York-area banks were awarded
$17.467 billion in the second $20 billion auction under the
Fed's term facility, compared with $16.49 billion in the first
San Francisco-area banks received $1.091 billion while
Richmond-area banks were allotted $750 billion.
The so-called TAF auctions were designed for the Fed to
counter a deepening credit crunch. Two more auctions are
scheduled for January.
By offering funds to a wider range of banks compared with
its open market operations, it did not carry the so-called
"stigma" associated with the discount window.
Since August, the Fed has lowered the discount rate for
primary credit borrowings to encourage banks to borrow at the
discount window. But after an initial surge, borrowings had
been subdued and some perceived that it was because borrowing
at the discount window has been perceived as a sign of
But the discount window stigma was not evident in December
and as credit conditions continue to be tight, banks might have
been more willing to borrow at the discount window if the rate
The discount rate is now 4.75 percent, or 50 basis points
above the benchmark fed funds rate.
For Jan. 2, the single-day primary credit borrowings
totaled $4.918 billion, the largest amount since Sept. 12, 2007
and the second largest single day tally since the $45 billion
borrowed just after the Sept. 11 attacks.
Borrowing at the discount window had increased sharply
since early December as banks sought to raise funds covering
the year-end and as market rates such as Libor soared.
Overall discount window borrowing for Jan. 2 totaled $4.923
(Reporting by Tamawa Kadoya and David Lawder; editing by Gary