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Cash-strapped banks have borrowed $300bn from the Fed this past week

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Cash-short banks have borrowed about $300bn from the Federal Reserve in the past week, the central bank announced on Thursday.Nearly half the money – $143bn – went to holding companies for two major banks that failed over the past week, Silicon Valley Bank and Signature Bank, triggering widespread alarm in financial markets.

The Fed did not identify the banks that received the other half of the funding or say how many of them did so.The holding companies for the two failed banks were set up by the Federal Deposit Insurance Corporation (FDIC), which has taken over both banks.

The money they borrowed was used to pay their uninsured depositors, with bonds owned by both banks posted as collateral. The FDIC has guaranteed the repayment of the loans, the Fed said.The figures provide a first glimpse of the scale of the Fed’s assistance to the financial sector after the two banks collapsed this past weekend.The rest of the money was borrowed by banks seeking to raise cash – likely, at least in part, to pay off depositors who tried to withdraw their money.

Many mega banks, such as Bank of America, have reported receiving inflows of funds from smaller banks since the bank failures last weekend.An additional $153bn in borrowing from the Fed over the past week came through a longstanding program called the “discount window”; it amounted to a record level for that program.

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