Please look at the H.4.1 report which showed average Discount Window borrowings of $3.009 billion last week, a $2.7 billion increase since the 12/05/07 report. The ending balance on 12/12/07 was $4.5 billion, more than double the amount borrowed a week ago. With the disappointment about the recent FOMC rate decisions largely centering on the failure to lower the Discount Rate to the Fed Funds rate, it’s no wonder that the Central Banks came out with the TAF experiment. The way I look at it, this will at least temporarily close the Discount Window. If the $4.5 billion at the Discount Rate doesn’t shift over to the lower rates that will be bid at the TAF, I will be shocked. So now we’ll likely have 3 Central Bank rates: the Fed Funds rate at the lower end, the TAF rates at the mid level and the Discount Rate at the top. As a result and unless the TAF experiment fails miserably, I expect that the demand for borrowing at the Discount Window is over. It never really worked anyway, so the TAF is just a neat way to close it. Next week’s H.4.1 report will be very interesting to watch.