Question

why the stigma effect may be heightened during an economic slowdown.

Answer 1

During an economic slowdown the stigma effect may be heightened because all the participants in the TAF (Term Auction Facility) bid simultaneously. They are borrowing at same rate of interest, thus permitting the banks to collectively approach the central bank in contrast to approaching individually the central bank with "hat in hand." Because all the participants "borrow collectively," thus stigma impact of borrowing from the Fed is reduced to a great extent.