Rule calls for banks to tap Fed discount window

Hsu said the changes regulators will propose aim to ensure banks are more prepared to respond to sudden flights of deposits. — AFP

US regulators are preparing to introduce a plan to require that banks tap the US Federal Reserve’s (Fed) discount window at least once a year to reduce the stigma and ensure lenders are ready for troubled times.

The proposal, which is being drafted behind closed doors by the Office of the Comptroller of the Currency, Fed and Federal Deposit Insurance Corp (FDIC), is the latest response to last year’s regional-bank crisis. The turmoil spotlighted that some lenders weren’t even set up operationally to quickly borrow from the window in a pinch.