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JPMorgan Borrowed at Least $5.9 Billion From Fed Window

JPMorgan Borrowed at Least $5.9 Billion From Fed Discount
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon speaks to the media following a speech at a conference on global capital markets competitiveness in Washington, D.C. Photographer: Andrew Harrer/Bloomberg

JPMorgan Chase & Co., the second-largest U.S. bank by assets, borrowed at least $5.9 billion from the Federal Reserve’s discount window over six months during the height of the financial crisis.

JPMorgan had previously disclosed it borrowed $500 million on Aug. 22, 2007, as similar loans were made to Bank of America Corp. and Wachovia Corp. “to display the effectiveness of the facility,” according to a joint statement at the time. JPMorgan accessed the program at least four more times through April 2008, according to documents released today under a Freedom of Information Act request by Bloomberg News and Fox News.

Chief Executive Officer Jamie Dimon told reporters in Washington yesterday that the release of the data “will make it harder for people to use the discount window in the future.” At JPMorgan, he said, “we never intend to use the discount window” in the future.

Howard Opinsky, a JPMorgan spokesman, said today in an e-mailed statement that the government encouraged the bank to use the discount window and other lending facilities during times of market turmoil “to help reduce any stigma and to improve market liquidity for our clients.”

JPMorgan took a $625 million overnight loan from the Fed on Oct. 16, 2007, the day before the New York-based bank reported a third-quarter profit of $3.4 billion, according to the Fed documents. Dimon told analysts on an Oct. 17 conference call that he was working with executives at Citigroup Inc. and Bank of America to set up an $80 billion fund to buy bad assets from structured investment vehicles, a plan later abandoned.

Tapping Discount Window

JPMorgan later borrowed $3.5 billion from the Fed’s discount window, secured by $83.8 billion in mortgage, consumer and commercial loans, on Jan. 16, 2008, the documents show. The bank reported that day a 34 percent drop in net income to $2.97 billion for the fourth quarter of 2007.

The bank accessed the Fed window again on March 7, 2008, for a $175 million overnight loan and on April 4, 2008, for $1.13 billion. The bank announced April 3 that it paid $140.7 million for 11.5 million shares of Bear Stearns Cos. about a week earlier to help close that acquisition.

JPMorgan had previously reported that it borrowed from the Federal Reserve discount window as well as from other central banks. The amount, timing and terms had never been disclosed.

“Although considered as a source of available liquidity, the firm does not view borrowing capacity at the Federal Reserve Bank discount window and various other central banks as a primary source of funding,” the lender said in a recent filing with the Securities and Exchange Commission.

JPMorgan accepted $25 billion from the U.S. Troubled Asset Relief Program during the financial crisis and repaid the funds in June 2009.

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