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The primary credit program is sometimes described as a "no-questions-asked" program with minimum administration. How will the primary credit program be different from the adjustment credit program? | |||||||
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Under the amended Regulation A, it is envisioned that a substantial reduction in administrative burden will be realized. Qualified depository institutions seeking overnight primary credit ordinarily will be asked to provide only the minimum information necessary to process the loan. In nearly all cases, this would be limited to the amount of the loan request and expected term. A Federal Reserve Bank has no obligation to make, increase, renew, or extend any advance to an institution. |
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What is the process a depository institution should follow to borrow from the discount window? Is there any change to this process due to the new credit program? | ||||||||
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Depository institutions will continue to contact their Reserve Bank in the same manner as before. Loan requests must be made by authorized individual(s) per the requesting institution’s borrowing resolution. No additional legal documentation is required. All loans will continue to be secured to the full satisfaction of the Reserve Bank. Institutions also may now request a loan at any time during the business day, rather than waiting until the end of day after completing their daily funding activities. Loans will be posted to borrowers’ accounts at the close of Fedwire, as before. |
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May I borrow Primary and Seasonal Credit at the same time? | ||||||||
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Yes. | ||||||||
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How many times may a depository institution borrow from the discount window under the primary credit program in any given period? | ||||||||
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No frequency guidelines exist and there is no expectation they will be established. Reserve Banks will evaluate frequency of borrowing in the context of primary credit being a backup source of liquidity. | ||||||||
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How will the determination be made as to which depository institutions will be eligible for primary credit, and how often will eligibility be reassessed? For secondary credit? | ||||||||
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Eligibility for primary credit is limited to depository institutions that are in generally sound financial condition (see Eligibility Requirements). Eligibility is determined on an ongoing basis using supervisory ratings and capitalization data; other information, when available, may also be used. Institutions not qualifying for primary credit will be eligible for secondary credit. Institutions will be notified promptly when their eligibility changes. |
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Will the Federal Reserve release information which identifies those depository institutions that are eligible for primary or secondary credit? | ||||||||
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No. An institution’s eligibility for primary credit is derived from and related to examination ratings prepared by and for the institution's banking supervisor; the rating itself constitutes an assessment of an institution’s soundness. The Federal Reserve, therefore, will not publish information regarding institutions’ eligibility for primary or secondary credit. |
Contact your local FRB district or visit the Federal Reserve's Discount Window Site |
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