beverly hirtle : opening remarks - heterogeneity blog series webinar opening remarks by ms beverly hirtle, executive vice president and director of research of the federal reserve bank of new york, for the heterogeneity blog series webinar, federal reserve bank of new york, new york city, 4 march 2020. * * * as prepared for delivery i am delighted to be here today to introduce this webinar about our liberty street economics blog series on heterogeneity in labor market outcomes. these blogs describe several ways that the forces shaping u. s. labor markets cause the experiences of workers to vary for different cohorts of individuals, including for women as compared to men ; for high - wage versus lower - wage workers ; and for workers who face more or less stringent constraints on their ability to borrow. these posts are based on research and analysis being conducted by new york fed economists, part of continuing efforts by our economists to understand how economic outcomes vary for different groups in the economy. this series follows our inaugural set of posts on heterogeneity in october of last year, in what we hope will be an on - going discussion of work being done at the new york fed and elsewhere to understand these important topics. in recent years, we have devoted considerable time and resources here at the new york fed to develop data and analytical approaches to gain deeper insights into the experiences of workers and consumers. for instance, we sponsor the consumer credit panel, or ccp, a quarterly report on household credit based on a large sample of credit data from equifax. we have also developed the survey of consumer expectations, or sce, a monthly survey of consumer expectations about inflation, the labor market and household finance. these reports and summary data are available from the new york fed ’ s center for microeconomic data, which can be accessed on the bank ’ s website, newyorkfed. org. aside from producing these public reports, new york fed researchers also use the underlying data to do detailed econometric analysis, some of which forms the basis of the blog series you ’ ll hear about today. in some cases, we are able to link the ccp, sce and other data sets to derive insights into a wider set of factors affecting workers and consumers, such as educational attainment, student debt burden, job satisfaction, job transitions, access to credit and housing choices — and consumer expectations about many of these factors

in when other sources of funds retreat, central banks acting in this capacity are known as lenders of last resort. banks rely on short - term funding such as overnight interbank loans or customer deposits to make the longer - term loans their customers need. if funding becomes scarce, banks become less willing to extend credit. to maintain the flow of credit, the federal reserve has made clear that it will provide short - term credit to sound depository institutions as needed. the lending program, known as discount window borrowing or primary credit, is provided at an abovemarket rate so that banks use the facility only as a backup source of funds. in theory, it is the higher rate that keeps banks from using the discount window as a regular source of funds. in practice, bankers are quite suspicious that borrowing from the federal reserve will bring additional regulatory scrutiny. in my banking days, i always described it as being like borrowing from my father. i was always sure that at some point i would have to answer uncomfortable questions. and since bank borrowing in normal times is rare, markets would likely view any such borrowing as a sign of weakness. while the fed doesn ’ t release individual borrower information, it does publish the total amount of outstanding loans weekly. the sudden appearance of new discount window lending would likely send market participants scurrying to identify the borrower, and it would at a minimum lead to rumors about who was borrowing and why. the resulting negative view of the discount window is known as stigma. when uncertainty about the health of individual institutions or the industry as a whole increases, stigma intensifies as the market tries to identify the weaker players. the dilemma facing the fed is that when discount window borrowing is most needed to keep credit flowing, it is most stigmatized. the discount window is the fed ’ s main tool for distributing money to the banking system in emergencies when bank - to - bank lending isn ’ t functioning, which is precisely the situation that prevailed in late 2007. but because banks were very reluctant to use the window, that key tool was broken. to offset the stigma effect, the fed took a number of steps. we reduced the spread – the difference between the primary credit rate and the federal funds target rate – ultimately from 100 basis points to 25 basis points. and we increased the maximum term from overnight to 90 days. but banks ’ concerns about stigma still more than offset the attractiveness of the lower rate. in december 2007, the fed went further, launching the term auction facility