WASHINGTON — Cash-strapped banks took the Federal Reserve up on its offer of $20 billion in short-term loans to help them overcome credit problems, but the interest rate wasn’t as low as some had hoped.
The central bank said Wednesday that it had received 93 bids Monday for $61.6 billion worth of loans, more than three times the amount that was made available. The 28-day loans carried an interest rate of 4.65 percent, which is slightly less than the 4.75 percent the Fed charges banks on emergency loans through its “discount” window.
Banks have been reluctant to use the Fed’s discount window because of the fear that investors will believe they are having trouble getting funds in a normal manner.
A second auction will be conducted today.
