Banks Borrowed $1.59 Billion From Fed in First Quarter of 2011
The Federal Reserve said banks ranging from El Dorado Savings Bank of Placerville, California, to Denali State Bank of Fairbanks, Alaska, were among borrowers from its discount window in the first quarter of 2011.
The Fed made more than 550 loans to banks across the country during the period, all of which were repaid, according to data released today on its website. The central bank listed a total of $1.59 billion in loans for an average amount of $2.83 million.
The discount window is the Fed’s main tool for providing cash to banks that have temporary funding shortfalls. The loans are fully collateralized and made by the system’s 12 reserve banks. The discount rate has been at 0.75 percent since February 2010. The Fed releases the once-secret data with a two-year lag every quarter as required by the 2010 Dodd-Frank Act.
The transactions occurred a year and a half after the longest recession since the Great Depression ended in June 2009. The recovery faltered in that quarter as the economy grew at an annualized rate of 0.1 percent after expanding more than 2 percent in each quarter of 2010. Growth accelerated again in the second quarter of 2011 to a 2.5 percent pace.
The largest loan was $51 million on Jan. 28, 2011, to Republic Bank of Chicago, which was repaid by the Oak Brook, Illinois-based firm three days later, the data show. The company borrowed $276 million in 10 separate loans during the quarter, according to the Fed report.
Republic, which has 16 offices around Chicago and about $1.4 billion in assets, borrowed the money as it was expanding into a new line of business servicing check-cashing firms with operations from New York to Florida, Chief Executive Officer William Sperling said in a phone interview today.
“A lot of them are big chains,” Sperling said. “We didn’t want to disappoint our customers, and we didn’t need as much as we borrowed, but better safe than sorry.”
About half of the discount window loans reported by the Fed were for amounts of less than $1 million, the data show. Borrowers of those smaller amounts included First Bank Financial Centre of Oconomowoc, Wisconsin, and Farmers and Merchants State Bank of Blooming Prairie, Minnesota.
To contact the reporter on this story: Jeff Kearns in Washington at email@example.com
To contact the editor responsible for this story: Chris Wellisz at firstname.lastname@example.org