NEW YORK: Financial institutions ran to their lender of last resort for record amounts of cash in the latest week, under extreme pressure from the wo rst global financial crisis in a generation, Federal Reserve data showed on Thursday.
Banks and dealers' overall direct borrowings from the Fed averaged a record $437.53bn per day in the week ended October 15, topping the previous week's $420.16bn per day. Some analysts are concerned that banks' dependence on Fed lending might become long term and difficult to change. "The banking system is going to become addicted to this very cheap money. Unwinding it will be very difficult," said Howard Simons, strategist with Bianco Research in Chicago. "We have effectively allowed the central banks to disintermediate the banking system. Why would I want to borrow from you if I could do it with the central bank, because they can always print it up and say 'here'...and they are in the business now of making sure I stay in business," Simons said. Primary credit discount window borrowings averaged a record $99.66bn per day in the latest week, up from $75bn per day the previous week. Primary dealer and other broker dealer borrowings were $133.87bn as of October 15, versus $122.94bn on October 8. "Other credit extensions", mostly reflecting loans to insurer AIG, were $82.86bn as of October 15, versus $70.30bn as of October 8. The Fed's lending to banks to enable them to purchase asset-backed commercial paper from money market mutual funds was $122.76bn as of October 15, versus $139.48bn on October 8. Proceeds from the US Treasury's sales of Treasury bills in the Fed's supplementary financing account, which are helping to fund the Fed's support of financial institutions, were $499.13bn as of October 15, versus $459.25bn as of October 8. http://timesofindia.indiatimes.com/Business/Intl_Business/Banks_borrow_record_4375bn_per_day_from_Fed/articleshow/3606604.cms The law of gravity says no fair jumping up without coming back down --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
