Four major banks said they each borrowed $500 million from the Federal Reserve's (Fed's) discount window, validating the U.S. central bank's efforts to restore liquidity to tight markets. Wachovia, Bank of America, JP Morgan Chase, and Citigroup each said they have “substantial liquidity” and the ability to borrow money elsewhere. But in a joint statement, three of the banks said they decided to borrow directly from the central bank to demonstrate “the potential value of the Fed's primary credit facility” and encourage its use by other banks. On Friday, the Fed cut its discount rate on loans to banks to 5.75 percent from 6.25 percent in an attempt to alleviate Wall Street's credit crunch. The central bank also made technical changes to make it easier for banks to obtain discount loans, including extending the credit period to up to 30 days. Borrowing money from the Fed's discount window had previously been seen as a last resort for troubled banks, a perception the Fed sought to eliminate.
