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Fed’s discount window has become a pain in the repo market

The stigma attached to borrowing from the Fed’s emergency lending window has contributed to recent turmoil in overnight lending markets

Banks have all but abandoned the Federal Reserve’s discount window, and it is straining Wall Street’s post-crisis infrastructure.

Borrowing from the discount window, the Fed’s only channel for lending directly to banks, has plummeted. Through October, banks are on pace to borrow just $750m from the Fed this year, half of last year’s total and well below the record low of $940m set in 1961.

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