U.S. banking giants borrow $2 bln from Fed

U.S. banking giants Citigroup Inc., J.P. Morgan Chase, Bank of America and Wachovia Corp.

The banks paid higher interest rates for the loans than if they'd borrowed the money elsewhere. Experts said they did that to try to reduce the stigma of tapping the discount window. In the past, if a bank used this source of borrowing, investors and depositors assumed the institution couldn't get a loan anywhere else. That, in turn, often made things worse by triggering runs on the bank and cutting off what market access the firm had left.

The Fed will report on the amount of weekly discount-window borrowing tomorrow at 4:30 pm ET. That should provide more insight into how well the Fed is doing in its attempt to inject liquidity and calm financial markets.

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