Nelson previously worked at the Fed, where he was involved in discount window policy, including changes made 20 years ago aimed at reducing barriers in part by no longer requiring banks to first exhaust other emergency liquidity resources.
Reuters GraphicsA recent Reuters analysis shows that many small banks, and even some large banks, do not conduct frequent tests of the discount window, calling into question their readiness to use it when needed.
In recent months the Fed has undertaken a push to get more banks to sign up to and test access to the discount window, and in late July the Fed and fellow bank regulators issued a reminder to banks to do so.
Regulatory agencies should make it clear that bank examiners will not view discount window use negatively, he wrote.
Bank executives say the potential for public disclosure and negative treatment by bank supervisors discourage use of the discount window, according to a Fed survey of senior bank financial officers taken in May and released last week.
Persons:
Bill Nelson, Nelson, Ann Saphir, Andrea Ricci
Organizations:
Fed, Bank Policy Institute, Bank, Thomson