Mar 24, 2023 - Economy

Good news in the Fed balance sheet

Data: Federal Reserve; Chart: Axios Visuals

The precarious situation of banks has made the weekly release of the Fed's balance sheet — every Thursday at 4:30pm ET — extra important, and this week's numbers offer some good news that the situation is contained.

State of play: As of Wednesday, the Fed had $53.7 billion extended through its Bank Term Funding Program announced March 12 in response to the SVB panic. That was up from $12 billion a week earlier.

  • But use of the discount window, the Fed's long-standing option for banks in need of quick cash, declined by a similar amount.

Translation: Total emergency lending to banks changed little over the last week, with combined lending through the two programs actually declining by $869 million.

  • That is evidence that American banks aren't experiencing mass runs that would force them to go to the Fed for cash.

Of note: The discount window lending occurred through the "primary credit" program, which is for banks that regulators view as healthy. There was zero "secondary credit" outstanding as of Wednesday, which are emergency loans on more stringent terms for banks in grave peril.

  • "No institutions shifted from primary credit to secondary credit," wrote Moody's Investors Service analysts, "which indicates that US bank supervisors continue to consider the banks that needed emergency support 'healthy' and not at elevated risk of imminent failure."
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