Banks' Rush to Emergency Lending Signals Dark Days Ahead

(Reuters) - Some 1,804 depository institutions tapped the emergency lending facility set up last March in the wake of Silicon Valley Bank's collapse, amounting to about 20% of all eligible firms, the Federal Reserve said on Friday.

About 95% of the borrowers, which included banks, credit unions, savings associations, and branches and agencies of foreign banks, had less than $10 billion in assets, the U.S. central bank said in its semi-annual Financial Stability Report.

The Bank Term Funding Program, as it was called, was aimed at addressing a liquidity crunch after a run on deposits led to the failures of SVB and Signature Bank and forced financial authorities to stage a rescue of the sector.

The facility lent on collateral without applying the usual haircuts and the loans were made on cheap terms.

The program stopped making new loans on March 11, a year after its creation. At its peak it extended a total of $165 billion in loans, with terms of up to a year. It is expected to close down completely by next March.

This article originally appeared on Yahoo Finance.