The Fed's Reserves

The Fed's discount window is lending to banks at 2008 levels

Banks recently borrowed $152 billion from the Fed, plus more from a new emergency loan program
The Federal Reserve took drastic measures last week to keep the private banking sector stable.
The Federal Reserve took drastic measures last week to keep the private banking sector stable.
Photo: Alex Wong (Getty Images)
We may earn a commission from links on this page.

After Silicon Valley Bank (SVB) failed, and Silvergate and Signature banks closed down, the US government figured the banking sector needed a boost. It decided to inject money, and stability, into the system to stave off the threat of widespread panic.

New data from the Federal Reserve suggests why officials were so concerned.

In October 2008, the month after Lehman Brothers collapsed, the Fed loaned out a then-record $110 billion to banks in one week, through what’s known as the discount window. (This is where the Fed makes liquidity readily available to eligible banks that need it.) That amount is equal to $153.8 billion in today’s dollars.

In comparison, in the week ended March 15, 2023, the Fed lent $152 billion at the discount window—plus another nearly $12 billion under an emergency loan program announced this past Sunday evening in the wake of the SVB failure. (The weekly discount window data is measured every Wednesday.)

Adjusting for inflation, the 2008 and 2023 figures look remarkably similar.

Bank stocks remain shaky

The banking sector is still not on entirely stable footing. Just days after the Fed’s emergency lending program was announced, 11 big US banks agreed to bail out First Republic Bank with a $30 billion rescue package, while in Europe, Swiss central bankers had to step in to offer a lifeline to Credit Suisse.

The Dow Jones Industrial Average was down more than 300 points in midday trading on March 17, amid continued concerns about the banking sector.

Related stories

What SVB Financial Group’s bankruptcy means for the bank

Silicon Valley Bank helped finance China’s innovation economy

JPMorgan says UBS should be Credit Suisse’s savior

First Republic Bank: What’s next?

For more Quartz coverage of topics in finance, click here.