Banks sought record amounts of emergency liquidity from the Federal Reserve over recent days in the wake of the failure of Silicon Valley Bank and Signature Bank, driving up the size of the Fed’s balance sheet after months of contraction, central bank data on Thursday showed.
Banks took a record $152.9 billion from the Fed’s traditional lender-of-last resort facility as of Wednesday, while also taking $11.9 billion in loans from the Fed newly created Bank Term Lending Program.
Including more than $140 billion in other funding provided to the new bridge banks for Silicon Valley Bank and Signature Bank established by the Federal Deposit Insurance Corp, the central bank’s total balance sheet mushroomed by roughly $300 billion in the last week. That reverses a substantial portion of the balance sheet reduction accomplished since last summer.
The bank lending facility was launched on Sunday amid highly unsettled markets, rattled by the failure of regional financial firm Silicon Valley Bank on Friday and then Signature over the weekend.
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