Collateral

The Federal Reserve Bank’s Discount Window assists depository institutions in establishing borrowing relationships, ensuring appropriate collateral is in place, and extending credit to Fourth District depository institutions. The Discount Window is administered in accordance with Regulation A, the Federal Reserve Act (Section 10B), and Operating Circular 10: Lending.

Recent News

Federal Reserve System Announces Changes to the Discount Window and Payment System Risk Collateral Margins Table effective April 27, 2009

For more information, visit the Federal Reserve System Discount Window website.

Types of Collateral

The following types of collateral are most commonly pledged to secure Discount Window advances. All such collateral must be placed in a loan collateral account prior to the request of any Discount Window advance.

Credit Extensions

All extensions of credit must be secured to the satisfaction of the Reserve Bank by collateral that is deemed acceptable. Assignments of collateral are made by the borrower under the terms and conditions of the Federal Reserve Bank's lending agreement. The Reserve Bank may require a perfected security interest on collateral pledged and, in certain situations, may require a public filing. Assets that have been accepted as collateral are assigned a value deemed appropriate by the Reserve Bank. The financial condition of an institution may be considered when assigning values.

Pledging Collateral

Arrangements for pledging collateral should be reviewed with discount window staff and will vary depending on the type of collateral being pledged. Securities issued by the U.S. government and most securities issued by U.S. government agencies are held in an automated book-entry records system at the Federal Reserve. Other securities pledged as collateral are generally held by a depository or other agent through a custodian arrangement. For qualifying institutions, loans pledged as collateral may also be held on their own premises, under a borrower-in-custody arrangement. Physical securities, promissory notes, and other definitive assets may, however, be held on the Reserve Bank’s premises.