Federal Reserve Balance Sheet Developments
Additional Information on Other Credit Extensions
In 2023, the Federal Reserve extended loans under its ordinary discount window lending authority (section 10B of the Federal Reserve Act), as well as, in one instance, under its emergency lending authority through the Bank Term Funding Program (BTFP) (established under section 13(3) of the Federal Reserve Act), to depository institutions that were later placed into FDIC receivership. Discount window loans were extended to Silicon Valley Bank, Signature Bank, and First Republic Bank, and BTFP loans were extended to First Republic Bank, in each case, before the depository institutions were placed into receivership. The Signature Bank discount window loans that were outstanding when the depository institution was placed into receivership were assumed by Signature Bridge Bank, N.A., an OCC-chartered insured depository institution. In addition, new 10B discount window loans were extended to Signature Bridge Bank, N.A. and Silicon Valley Bridge Bank, N.A., both OCC-chartered insured depository institutions that were eligible discount window borrowers under the Federal Reserve Act. These loans to the two bridge depository institutions, as well as the loans outstanding to First Republic Bank as of its placement into receivership, have been reported by the Federal Reserve in the weekly Federal Reserve Balance Sheet: Factors Affecting Reserve Balances - H.4.1 statistical release as "Other credit extensions."
The loans to the two bridge depository institutions were extended under section 10B discount window authority against collateral posted by the depository institutions, and supported by an FDIC guarantee of repayment. The 10B discount window loans to First Republic Bank were fully secured by pledged collateral, and in connection with the bank's placement into FDIC receivership, the repayment became covered by an FDIC guarantee. The BTFP loans to First Republic Bank were extended against eligible collateral as provided for under the terms of the BTFP, and likewise became covered by an FDIC guarantee of repayment in connection with the bank's placement into FDIC receivership.
Upon the two bridge depository institutions and First Republic Bank being placed into receivership, the discount window and BTFP loans were not assumed by the acquiring depository institutions. In each case, the outstanding discount window and BTFP loans are being repaid from the proceeds of the sales to the acquiring depository institutions, if any, and the recovery on the collateral that was left behind in the receivership, supported by the FDIC guarantees of repayment. The outstanding loans accrue interest at 100 basis points above the applicable discount window or BTFP rate until they are repaid in full. The Federal Reserve expects that these loans will be repaid in full before the end of 2023.