Hit With Big Withdrawals, Fed Sells Assets, Borrows Cash

``The Fed was hit with withdrawals of $83.3 billion last Wednesday, the largest withdrawals from its deposit accounts that were not associated with quarterly tax payments since February of 2009... The Fed was apparently forced to take extraordinary measures to fund these withdrawals. These included the outright sale of nearly $24 billion in its Treasury note and bond holdings from the System Open Market Account. As a result, the Fed's System Open Market Account (SOMA) fell to $2.611 trillion, some $43 billion below the Fed's stated target of $2.654 trillion. Prior to this week, it had not strayed from by more than $7 billion since June. The Fed's action was not only a direct contradiction of its stated policy, but it was done without warning or explanation... The Fed took another unusual and virtually unprecedented action to fund these massive withdrawals. It borrowed $43 billion from foreign central banks (FCBs) through Reverse Repurchase Agreements (revese repos, or RRPs).''