The safety net for banks

Planet Money

NPR

News, Business

4.6 • 30.5K Ratings

🗓️ 1 April 2023

⏱️ 23 minutes

🔗️ Recording | iTunes | RSS

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Summary

In the first half of March, three banks - Silicon Valley Bank, Signature Bank, and Silvergate - all had relatively classic bank runs and collapsed. Which sparked some major banking stress. As a result, the Federal Reserve got a lot of requests to use one of its oldest and most important tools for soothing such troubles: the discount window.

The discount window is like a safety net for banks. And recently, a lot of banks have needed it. So, what is the discount window, where did it come from, and how does it work? And, amidst all the recent banking turmoil, has it been working the way it should? In this episode, we crack open the discount window.

This episode was produced by Emma Peaslee with help from Willa Rubin. It was engineered by Katherine Silva. It was fact-checked by Sierra Juarez and edited by Sally Helm. Jess Jiang is our acting executive producer.

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Transcript

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0:00.0	This is Planet Money from NPR.
0:04.0	Betsy Duke worked in banking for 30 years.
0:09.6	She ended up on the board of governors of the Federal Reserve System, and she was the chief
0:14.2	financial officer of a little community bank in the Blazer with Giant Shoulder Pads era.
0:21.2	Did you have like poovie bangs?
0:23.2	I did.
0:24.2	No, I don't think so.
0:25.2	No, I did not.
0:26.2	Okay.
0:27.2	Dodge that one.
0:28.2	Are we wearing a power suit?
0:29.2	How wide are your lapels?
0:30.7	Oh, I don't really know because you remember this span from the mid 70s all the way through
0:37.3	too.
0:38.3	Okay, so we're talking like inches of difference in lapel.
0:41.0	We're talking about power suits because Betsy was in the business of running a community
0:47.6	bank in Virginia Beach.
0:49.1	It's called the Bank of Virginia Beach.
0:51.7	We were very small bank.
0:52.7	I don't know, maybe $50 million or something.
0:55.9	That's million within.
0:57.7	Her context, Goldman Sachs, is like 1.44 trillion with the T.
	...

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