Frequently Asked Questions - Discount Window Lending Programs
- Why did the Federal Reserve change the discount window at the beginning of 2003? What are the major objectives of the primary and secondary credit discount window facilities?
- What are the key features of primary credit and secondary credit?
- How do Reserve Banks administer the primary and secondary credit discount window programs?
- Is a depository institution that is eligible for primary credit allowed to use the Federal Reserve as a regular source of funds?
- Are there any restrictions on the use of funds a depository institution borrows from the Federal Reserve under the primary credit program? Under the secondary credit program?
- How do Reserve Banks determine which financial institutions are eligible for primary credit? For secondary credit? How often is eligibility reassessed? When are institutions notified about their eligibility?
- How is the primary credit rate set?
- Does the Federal Reserve disclose the identity of institutions that borrow from the discount window?
- Does the Federal Reserve publish information about which depository institutions are allowed to borrow from the discount window at the primary credit rate?
- How do bank supervisors/examiners view an institution's use of primary credit?
- Does the Federal Reserve share the list of depository institutions eligible for primary and secondary credit with bank regulators? Does the Federal Reserve share information about institutions' use of the discount window with bank regulators?
- How does the Federal Reserve publish aggregate data on borrowings under the primary and secondary credit programs?
- The Federal Reserve describes the primary credit program as a 'no questions asked' program with minimum administration. What does that mean?
- How many times may a depository institution borrow from the discount window in any given period?
- Is there any threshold for the size of a loan beyond which a Reserve Bank will ask the depository institution some questions regarding the loan?
- In what situations may a Reserve Bank extend primary credit for consecutive days? What is the maximum period that credit can be outstanding?
- What procedures should a depository institution follow to borrow from the discount window?
- When are the proceeds of discount window loans made available to the borrower? When is the subsequent repayment posted?
- What is the purpose of the seasonal lending program? Where can I find more information about the seasonal lending program?
- Did the introduction of the primary and secondary credit programs have any impact on the seasonal credit program?
- If a depository institution is in the seasonal credit program, may it use seasonal credit rather than the primary credit facility for short-term needs?
*The spread of the primary credit rate over the FOMC's target federal funds rate was initially 100 basis points. During the financial crisis, this spread was reduced to 50 basis points on August 17, 2007, and was further reduced, to 25 basis points, on March 16, 2008. Effective February 19, 2010, the spread of the primary credit rate over the FOMC's target federal funds rate was increased to 50 basis points. The Federal Reserve will assess over time whether further increases in the spread are appropriate.