Wachovia Held $29 Billion in Fed’s Discount-Window Borrowing

Wachovia Corp., the bank later acquired by Wells Fargo & Co., carried a $29 billion balance at the Federal Reserve’s discount window over two days in October 2008 as the industry’s use of the program hit a record.

As clients withdrew money and investors refused to lend, Wachovia borrowed $29 billion on Oct. 6 and then on Oct. 8 repaid $11 billion and took out another $7 billion, according to Fed documents released today in response to a Freedom of Information Act request. Borrowing from the Fed’s discount window, its oldest lending program, rose to a record $111 billion in the week ended Oct. 29, 2008.

“During the financial crisis and prior to the Wells Fargo merger while still an independent company, Wachovia borrowed and repaid funds from the discount window,” Mary Eshet, spokeswoman for San Francisco-based Wells Fargo, said in a phone interview.

The documents provide the most detailed view yet of banks that relied on the Fed’s primary lending program as markets and funding seized up after Lehman Brothers Holdings Inc. failed. Wachovia agreed in principle to sell itself to Citigroup Inc. on Sept. 29, before deciding less than a week later to be acquired instead by Wells Fargo in a deal that created the fourth-largest U.S. bank. Wells Fargo completed the Wachovia purchase on Dec. 31, 2008.

The Oct. 6 borrowing included $23 billion in loans set to mature Jan. 2, 2009, and $6 billion that would mature Nov. 4, 2008, according to the documents. The Oct. 8 loan was set to mature Nov. 4, the Fed data show.

Outstanding Loans

On Oct. 29, $15 billion of the loans were still outstanding, the Fed documents show. Wachovia held $3 billion set to mature Nov. 4, and another $12 billion set to mature Jan. 2, 2009. By the end of November, Wachovia had repaid all the loans, Fed documents show.

Earlier this year, the Financial Crisis Inquiry Commission released a previously secret November 2008 presentation by regulators showing that Charlotte, North Carolina-based Wachovia borrowed $29 billion from the discount window on Oct. 6.

Wachovia, New York-based JPMorgan Chase & Co. and Charlotte-based Bank of America Corp. said in a statement in August 2007 that each had borrowed $500 million from the Fed’s discount window “to display the effectiveness of the facility.” Citigroup Inc., based in New York, also borrowed $500 million, the New York-based bank said in a separate statement.

Bank of America

Bank of America tapped the Fed’s discount window two more times in August 2007 than previously disclosed, going to the Fed on Aug. 23 and Aug. 24 for $500 million each day, according to Fed documents. JPMorgan borrowed at least $5.9 billion from the discount window over six months during the height of the financial crisis, documents show.

The regulator had never revealed who used the discount window since it began lending in 1914. Bloomberg News is posting the raw documents here for subscribers to the Bloomberg Professional Service as well as online at www.bloomberg.com.