A group of major banks meeting in a conference call with U.S. monetary policy officials expressed strong support for the Federal Reserve's move on Friday to bring stability to volatile financial markets by reducing the discount lending rate.
The Fed reduced the rate at which it makes short-term loans to commercial banks and other institutions by half percentage point to 5.75 percent, saying it was attempting to restore orderly conditions amid financial markets conditions which had deteriorated.
In a statement, The Clearing House - a payment services group owned by major banks - said that the President of the New York Federal Reserve Bank, Timothy Geithner, convened a conference call with Clearing House members and major investment banking firms about conditions in the financial markets and the Fed's move. The Vice Chairman of the Federal Reserve, Donald Kohn, also participated.
Those in attendance reacted very positively to comments by both officials' encouraging the institutions to take advantage of the so-called discount window.
The officials recognized the use of it as a sign of strength, they said, adding that the Fed's action would encourage financial market participants to take steps that would improve conditions in funding and credit markets.
The participants in the call included ABN AMRO; Bank of America; The Bank of New York Mellon; The Bank of Tokyo-Mitsubishi UFJ, Ltd.; The Bear Stearns Companies Inc.; Citigroup; Deutsche Bank Group, Goldman Sachs; JPMorgan Chase & Co.; Lehman Brothers; Merrill Lynch; Morgan Stanley; UBS; U.S. Bank; Wachovia; and Wells Fargo.