I don’t know about the specifics of these securities, having a call provision on a bond isn’t particularly unusual tho. It’s still better than to force banks i

I don’t know about the specifics of these securities, having a call provision on a bond isn’t particularly unusual tho. It’s still better than to force banks into a liquidity crisis and have to bail them out… The Fed must have calculated the exposure of financial institutions to US government bonds when it planned its interest hikes and it should’ve made contingencies otherwise there is a pretty big regulatory failure here. Yes institutions should hedge interest risk like any other risk however there is still a limit to hedging. This isn’t banks betting the house on black jack and hookers these bonds were supposed to be the safest place to park your money under any other circumstances. As for what price would the fed or who ever buy them back? Well if they can exercise a call provision it would just paying the value of the bonds + the coupon before maturity. Many bonds come with this provision so companies can repay their debt earlier if market conditions change and allow them to borrow money under better terms. From my understanding it was too late to do this with SVB as they had already realized substantial losses however not stepping in now and having more banks default would be quite silly.