Four big banks draw from Fed window; move seen as easing stigma

0 Comments | AFP, August, 2007

WASHINGTON (AFP) — Four major US banks said Wednesday they had borrowed 500 million dollars each from the Federal Reserve discount window, a move seen as helping ease a credit squeeze and reducing the stigma of such loans.

The unusual announcement by four of the largest US banks came after the central bank had cut its discount rate for direct loans to commercial banks and taken other moves to get credit flowing.

"It is important at this time to take a leadership role in demonstrating the potential value of the Fed's primary credit facility and to encourage its use by other financial institutions," three banks -- Bank of America, JP Morgan Chase and Wachovia -- said in a joint statement.

Citibank said separately that it "stands ready to continue to access the...