In yesterday's release of lending data by the Federal Reserve Bank covering 2008 to early 2010, one item that caught the eye of many observers was the amount of overnight borrowings by some corporate credit unions, notably U.S. Central and WesCorp–"astounding," said an industry analyst.
The amounts are breathtaking.
On Nov. 24, 2008, for instance, U.S. Central borrowed $6 billion from the Fed's so-called discount window, a long-established emergency loan program for institutions in need of short-term funds who lacked other places to get it. It returned on Nov. 25 for another $6 billion. There were dozens more transactions, often over $1 billion at a time.
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WesCorp also borrowed often from the Fed discount window, hitting a high on Dec. 22, 2008, of $2.3 billion. There were many other loans to WesCorp above $1 billion.
Numerous natural person credit unions also made frequent use of the discount window, with over 30 showing up in yesterday's data. Among the borrowers: Alaska USA FCU, Apple FCU, Nassau Educators FCU, Randolph Brooks FCU, State Employees' CU (NC), University of Wisconsin CU and Visions FCU.
The spin reflected in most media stories today about the discount window lending is that the Fed "kept the window open" in the height of the financial crisis, to help institutions weather the storm.
Discount window loans once were stigmatized–and were also kept highly confidential. Yesterday's data dump, covering loans from August 2007 through March 2010, came as a result of a lawsuit filed by Bloomberg News and Fox Business News.
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