Posted 2/27/2024, 6:04:00 AM
Banks Sign Up for Fed's Emergency Funding Backstop Amid Regulator Push to Prepare for Potential Outflows
- Banks are signing up for a Fed overnight funding backstop that has been largely unused for over 2 years
- The facility allows banks to borrow emergency cash using Treasuries and mortgage securities as collateral
- Banks have been reluctant to use it due to worries about stigma and showing signs of weakness
- Regulators have pushed banks to sign up to prepare for potential deposit outflows
- So far 26 banks have signed up, accounting for 2/3 of Treasuries and agency securities held by banks