The use of authorities under Section 13(3) of the Federal Reserve Act Section 13(3) of the Federal Reserve Act authorizes the Federal Reserve Board to make secured loans to individuals, partnerships, or corporations in "unusual and exigent circumstances" and when the borrower is "unable to secure adequate credit accommodations from other banking institutions."
This authority, added to the Federal Reserve Act in 1932, was intended to give the Federal Reserve the flexibility to respond to emergency conditions. Prior to 2008, credit had not been extended under this authority since the 1930s. 1 However, responding to the extraordinarily stressed conditions in financial markets, the Board has used this authority on a number of occasions over the past year.