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Use the Fed's Discount Window for Immediate Short-Term Needs

Monday, January 1, 2007

The Federal Reserve's discount window is a ready funding source that is available on short notice for financial institutions needing to meet temporary shortages of liquidity. Credit can be accessed when other sources are not available, such as late in the afternoon or during tight market conditions. All loans must be fully collateralized. The discount window accepts a wide array of collateral.

Types of credit include the following:

  • Primary credit is available to sound depository institutions normally on a very short-term basis—typically overnight—on a "no questions asked" basis. The rate is 100 basis points above the Fed's target rate for fed funds. The use of primary credit strengthens an institution's funding options, especially in contingency situations. In response to recent tightness in the mortgage funding markets, the terms were changed to allow for maturities of up to 30 days and at a rate only 50 basis points above the federal funds target. These terms will remain available until the Federal Reserve determines that market liquidity has improved.
  • Seasonal credit is designed to assist small depository institutions (typically under $500 million in total assets) in managing significant seasonal swings in their loans and deposits. Seasonal credit is available to depository institutions that can demonstrate a clear pattern of recurring intra-yearly swings in funding needs at a market-based rate for maturities up to nine months.
  • Other credit consists of secondary credit, which is available to depository institutions that are not eligible for primary credit at terms that are more restrictive; and emergency credit, which is made available only in unusual and exigent circumstances.

For more information and required legal documentation, go to or call the St. Louis Fed's credit office at 1-866-666-8316.