Total Borrowings of Depository Institutions

The Update:

• Extension of the Primary Dealer Credit Facility (PDCF) and the Term Securities Lending Facility (TSLF) through January 30, 2009.

• The introduction of auctions of options on $50 billion of draws on the TSLF.

• The introduction of 84-day Term Auction Facility (TAF) loans as a complement to 28-day TAF loans.

• An increase in the Federal Reserve's swap line with the European Central Bank to $55 billion from $50 billion.

The Good:

Michael Feroli, U.S. economist with JPMorgan in New York added: “more and more banks are trying to take advantage of the pure economic advantage of borrowing at a cheap rate and you are seeing a gradual fading away of the stigma of using the discount window.”

The Bad:

U.S. banks' direct primary credit borrowing from the Federal Reserve rose to a record high in the latest week. Banks primary credit borrowings averaged $17.45 billion per day in the latest week, up from the previous record set last week of $16.38 billion, the Fed said on Thursday.

On the day of July 30, banks' primary credit borrowings inched lower to $17.38 billion, down from $17.68 billion on July 23. Banks' overall discount window borrowings averaged $17.64 billion per day in the week ended July 23, up from an average of $16.51 billion per day the week before. Dealers borrowed $3 billion average per day from the Primary Dealer Credit Facility in the latest week after not borrowing at all the week before.