US Small Banks Unprepared for Emergency Borrowing from Fed

A Reuters analysis reveals that many small banks in the United States are not prepared to borrow from the Federal Reserve in times of emergency. The collapse of Silicon Valley Bank earlier this year highlighted the lack of preparedness among smaller banks, with insufficient collateral and a failure to test access to the "discount window" for emergency loans. This vulnerability has raised concerns at the Federal Reserve, prompting updated guidance for banks to incorporate the discount window into their contingency funding arrangements. Data shows that smaller banks are less likely to have utilized the discount window, indicating a need for improved readiness.