§ 1465 Bank Borrowing And Collateral

• •Banks can borrow from the Federal Reserve, FDIC, or FHLB.
• •Banks can use their assets as security for those loans.
• •The rule applies to all commercial banks.

A bank needs extra cash to cover customer withdrawals and uses its loans as security to borrow from the Federal Reserve.

The bank can pledge its assets to get a loan from the Fed because this statute allows it to borrow from those government lenders.