Banks Face Borrowing Stigma; Publicly Released Details of Fed Lending Could Show 'Weakness,' Say Some
Author: Luca Di Leo; Maya Jackson Randall</br></br>Some banking experts predict that the Federal Reserve's disclosure of the financial institutions that tapped an emergency-lending tool could make banks more reluctant to borrow from the central bank.</br></br>"I have concerns that it will make banks more reluctant to borrow and reduce the efficacy of a critical central-bank function in a crisis," said Donald Kohn, the former Fed vice chairman who retired in September after 40 years at the central bank.</br></br>The treasurer of a regional bank that didn't borrow from the Fed during the crisis said that "the perception is that if you need to borrow money from the Fed, you are in a position of weakness." He said his bank went to the Fed for emergency lending only once: on Sept. 11, 2001.</br></br>"I remember thinking this is the biggest deal in the world," said the executive.