Frequently Asked Questions < Financial Examiners

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Under the new primary credit program, how should a bank examiner/supervisor view an institution’s borrowing from the discount window? What steps has the Federal Reserve taken to educate bank regulators/examiners about this new credit program?

Given the fundamental changes in the new primary credit product, healthy institutions may find primary credit playing a larger role in their ongoing liquidity management and contingency funding plans. Bank examiners should view occasional use of primary credit as appropriate and unexceptional. Of course, excessive reliance on expensive funding, including heavy use of primary credit, may prompt examiners to ask questions, particularly if such use is inconsistent with the institution's funding policy and strategies regarding alternative funding sources. Throughout the first half of 2003, the Federal Reserve will work with the Federal and state banking supervisors to promote awareness of the new lending programs and to ensure that supervisory oversight reflects an orientation that is consistent with the purpose and objectives of the revised programs as articulated in the amended Regulation A.

Will the Federal Reserve share the list of depository institutions eligible for primary and secondary credit with the Federal and state banking supervisors?

The Federal Reserve will not send banking supervisors a list showing which institutions are eligible for primary and secondary credit. Information about an individual institution’s eligibility, however, may be shared during discussions with regulators when Reserve Bank analysts are gathering information on an institution’s financial condition.