Banks ‘Pushed’ to Borrow From Fed to Avert Financial Crisis

The Federal Reserve is continuing to “push” banks to borrow from the central bank to help destigmatize the use of the discount window, says Fed Gov. Lisa Cook at a Brookings Institution event on May 8. When the Federal Reserve was established in 1913, the discount window was available to struggling financial entities. For more than a century, the Fed had been considered the lender of last resort. Typically, the central bank dissuaded banks from tapping the window unless they were on the brink of failure. Since the regional banking crisis more than a year ago, the Fed and other financial regulators have discussed establishing a rule forcing banks to borrow from the institution regularly....