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This article is from Sunday. It's wildly out of date. > is there a reason why the US government / fed can’t just buy them off the banks at the “denominated pr
by MilnerRoute 4y ago
This article is from Sunday. It's wildly out of date.
> is there a reason why the US government / fed can’t just buy them off the banks at the “denominated price” or issue a bridge loan that would be repaid when they mature?
Yes, that's basically what happened. Just a few hours after this article came out, the Federal Reserve said "it will offer bank loans for up to a year in exchange for US Treasury bonds and mortgage-backed securities that lost value. The Fed will honor the debt’s original value for the banks that take the loans."
- everybodyknows 4y agoNicely ambiguous what is to happen at the end of the year. Rollover on the same terms? Demand for full repayment? Might have to wait a year to find out.
- coolspot 4y agoBanks don’t need that much liquidity unless some exceptional thing happens, like a bank run. SVB had enough assets to cover all the deposits. Problem was that they couldn’t convert those assets (long maturity treasuries) back to cash fast enough. Now there is a facility in place that lets you convert those treasury notes to cash as soon as needed.