Barr: Fed’s bank funding program came to an end

The Fed’s Bank Term Funding Program, which was launched during last year’s regional banking crisis, is set to end without extension according to Michael Barr, the Fed’s vice chair for supervision.

The program, which allowed banks and credit unions to borrow funds for up to a year, has seen a surge in borrowing due to anticipated Fed interest rate cuts. This has made the program attractive to financial institutions seeking stability amid economic uncertainties.

However, the program’s temporary status has been reiterated, and the likelihood of extension has been downplayed. The March 11 expiration date could impact bank borrowing and financial stability, and regulators will need to balance access to credit, financial stability, and responsible banking practices.

This decision, which moves towards normalizing financial operations following 2023’s banking crisis dating back to last March, is a turning point in US financial regulation and policy.