After a drop earlier in the month, banks flocked to the Federal Reserve Board's discount window in the week that ended Sept. 12.
As of Wednesday primary credit to healthy institutions totaled $7.152 billion, the highest level since the Sept. 11 attacks. The total was more than seven times higher than a week earlier, when primary credit stood at $1.106 billion.
The Federal Reserve Bank of New York was particularly active, lending $4.93 billion of the $7.386 billion of loans outstanding Sept. 12. The Cleveland Fed lent $1.615 billion, and the Richmond Fed lent $550 million. Only the Boston Fed had no loans outstanding.
Most of the loans made through the discount window - $6.181 billion - will mature in the next 15 days. The rest will mature within 16 to 90 days.
The average daily balance grew 135.5% during the week, to $3.158 billion. The vast majority of the growth was in the form of primary loans. The Fed did not make any secondary loans to weaker financial institutions.
Liquidity problems led the Fed to cut the discount rate by 50 basis points Aug. 17, to 5.75%. Though lending through the window was initially slight, the Fed asked four companies - Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co., and Wachovia Corp. - to borrow from the window to reduce the stigma traditionally attached to such moves. Each company borrowed $500 million in the week that ended Aug. 22.
The Federal Open Market Committee will meet Tuesday to consider cutting the federal funds rate.
