WASHINGTON — As policymakers debate how — not whether — to strengthen investment bank oversight, the firms continued their dramatic pullback from the Federal Reserve Board's discount window.
There were no loans made to investment banks through the discount window as of Wednesday, the first time lending to these institutions flatlined since they won access to the window in March. A week earlier, investment bank borrowing from the window had fallen 80%, to $1.7 billion.
When the Fed opened the discount window to investment banks in the aftermath of the Bear Stearns Cos. collapse, they flocked in droves — reaching a high of $37 billion. But in the months since, a consensus has grown among regulators that supervision of investment banks must be tightened in exchange for that access.
On Wednesday, Treasury Secretary Henry Paulson supported giving regulators receivership powers over investment banks.
Meanwhile, the Fed said the fair value of assets acquired from Bear totaled $28.893 billion, just off the original $29 billion total.
Lending to healthy commercial banks fell 6%, to $12.814 billion.