Fed’s Barr Announces End of Emergency Loan Program
Quiver Quantitative — The Federal Reserve's Bank Term Funding Program, initiated during the regional banking crisis, is set to conclude without extension, as indicated by Michael Barr, the Fed's vice chair for supervision. During a recent event in Washington, Barr highlighted the program's success in easing financial stress, emphasizing its role as a temporary measure. Set to expire on March 11, this program has been pivotal in providing banks and credit unions with the option to borrow funds for up to a year.
Barr's remarks, made at an event hosted by the Women in Housing and Finance group, stressed that the program was designed for emergency scenarios. In recent weeks, there has been a surge in borrowing from the program, driven by expectations of imminent Federal Reserve interest rate cuts. This uptick in borrowing underscores the program's attractiveness to financial institutions seeking stability amid economic uncertainties.
Market Overview: -Fed's top bank regulator throws cold water on extending the Bank Term Funding Program, designed as a temporary crisis buffer. -Program, set to expire in March, saw record usage in recent weeks on hopes of imminent rate cuts. -Barr emphasizes the emergency nature of the program and expects borrowing to continue until its scheduled closure.
Key Points: -Michael Barr, Vice Chair for Supervision, reiterates the temporary status of the loan program, initiated during last year's regional banking crisis. -He downplays the likelihood of extension, despite heightened demand fueled by potential rate cuts as early as March. -Barr acknowledges concerns about the program's impact on the broader financial system and long-term reliance on such measures.
Looking Ahead: -The March 11 expiration
Read more on investing.com
