The Federal Reserve can but only by increasing reserves. This exposes the Fed by risk if the bank is shuttered. In that case the Fed is stuck with bonds paying

The Federal Reserve can but only by increasing reserves. This exposes the Fed by risk if the bank is shuttered. In that case the Fed is stuck with bonds paying 2.0% while it is paying more on reserves and ends up losing money every month. Today the Fed is paying out more interest than it is earning with an estimated $80B loss for 2023. These losses are creatively booked as deferred assets. The Fed can also take losses if the bank fails and the assets don’t pay back at par value. Mortgage holders walk away from their homes as prices fall. And since it is the Federal Reserve it is taking all of these risks on the US taxpayers behalf.