NEW YORK (Reuters) - With encouragement from the Federal Reserve, U.S. banks have turned to a long-shunned lending facility known as the discount window to borrow $50.8 billion, according to data the central bank released on Thursday.

FILE PHOTO: The Federal Reserve building pictured in Washington, U.S., July 16, 2018. REUTERS/Leah Millis/File Photo

The outstanding balance was the most since April 2009 and a reversal from negligible sums since the financial crisis.

Borrowing at the discount window has long carried a stigma because of speculation about which banks were using it and whether they on verge of dumping assets at fire sale prices.

The Fed changed its disclosure practices last week to help curb such speculation. It will no longer show which of the 12 district banks in the Federal Reserve System made the loans in the national total.

No longer, for example, can someone see a big increase in discount window borrowing through the Federal Reserve Bank in Kansas City and guess which bank might be having trouble with energy loans.

The Fed, in a note on its prior weekly release, said the change was made to support its goal announced on March 15 to use the discount window with other tools to encourage banks to lend to households and business during the coronavirus pandemic.

At the same time, the Fed slashed its target for its key interest rate by 1 percentage point to a range of 0% to 0.25%. It set the rate on discount window loans at 0.25%, basically eliminating the usual 0.50% extra penalty.

Healthy banks can get instant cash from the discount window in exchange for collateral, usually pools of loans. If the banks had to asked other lenders for cash it could spark doubts about their condition and feed a selling panic.

JPMorgan Chase & Co Chief Executive Jamie Dimon said last month that his bank would use the discount window to help reduce the stigma.

Under the Dodd-Frank financial reform law, the Federal Reserve must disclose within two years which banks used the window, how much they borrowed and when.

Walker Todd, a visiting professor at the University of Akron and a former lawyer for regional Fed banks, said the Fed’s shift to obscure details from weekly borrowing amounts violates the spirit of transparency of the law.

“The Fed misreads the situation if it thinks this is in the public interest. Everyone expects the numbers to be large, so disclosure would cause no panic.”

(Corrects sixth paragraph to note on “its prior” weekly release ... instead of ... “on the” weekly release, as sent in error.)