How do bank supervisors/examiners view an institutions use of primary credit?
The Interagency Advisory on the Use of the Federal Reserve’s Primary Credit Program in Effective Liquidity Management (July 23, 2003) encourages depository institutions to consider the discount window as part of their backup liquidity arrangements. As is true of any backup liquidity facility, being prepared to borrow primary credit enhances an institution’s liquidity. The Advisory states that “bank supervisors and examiners should view the occasional use of primary credit as appropriate and unexceptional.” Of course, excessive reliance on expensive funding, including heavy use of primary credit, may spark some questions by examiners.
Related Questions
- If I have attended multiple colleges and transfer credit is listed on the transcript of my primary institution, do I need to send a transcript from each school?
- If a depository institution is in the seasonal credit program, may it use seasonal credit rather than the primary credit facility for short-term needs?
- Does the Bank mediate between a customer and a credit institution?
