Regardless of how it's marked on their books, the loans and bonds pay very little interest. This works fine when their source of funds is checking and savings

Regardless of how it's marked on their books, the loans and bonds pay very little interest. This works fine when their source of funds is checking and savings accounts that pay zero interest. When t-bills are paying 4%, fewer customers will be willing to accept this and will pull their funds or demand higher interest. The problem is that some banks may not be able to afford this.