Last Updated Feb 19, 2010 9:38 AM EST
The Fed's discount window is a petty-cash drawer for banks that need overnight funds right away. In a more normal economy, raising the discount rate is a major step, intended to both raise banks' costs of borrowing, and provide a signal to the markets.
Yesterday's move was more of a signal, since there are just $15 billion in loans outstanding from the discount window, compared to the zillions provided through other means (this I heard on CNBC this morning, although Tiger Woods got more coverage). But it shows the Fed is ready to act. It's also a reminder that the other Fed programs are drawing to a close soon.
This is the first little bit of great news, folks. The Fed has clearly outlined the measures it will take, and is now showing to the market that it will mop up the liquidity mess in an orderly fashion.
Read these related CBS MoneyWatch posts:
"Remember, The Training Wheels Come Off In February"
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