Re:New York Fed Again Upsizes Liquidity Plans for Turn of th...
by MichaelConlon on Thursday December 19, 2019 @10:33AM
(#21835739)
You're correct in that it means that the bank messed up. The idea is that this is for (relatively) small amounts to cover reserve funds for a short period of time. This may happen because large deposit accounts decided to withdraw unexpectedly or loan repayments stopped coming in. Ideally this is to be used for a day or maybe a week. However, you're correct that there is certainly potential for abuse in the system if a bank is doing this repeatedly every day for months or more. I'm not sure what, if any, measures are in place to prevent that abuse.
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