Fed Discount Window Weekly Update
This week’s Primary Credit activity at the Fed’s Discount Window:
This week’s primary credit balance was $2.4 billion, up from $2.2 billion a week ago.
The next move for the Banks is to wait for the Fed to lower rates which will reduce the unrealized losses banks carry by way of inflating bank fixed income investment portfolios (fixed income prices move in the opposite direction of interest rates).
Bank of America alone has approximately $115 billion of unrealized losses on its fixed income portfolio. If the Fed did not lower rates and Banks had to start to absorb these losses, the number of bank failures would significantly accelerate.
