2 ms·
> It seems to me (being uneducated in the matter) that if a bank is holding US government debt (treasuries) as "hold to maturity" that the US Government should
by hnfong 4y ago
> It seems to me (being uneducated in the matter) that if a bank is holding US government debt (treasuries) as "hold to maturity" that the US Government should have some ability to offer a line of credit against those assets for cases like this one was.
Yes, the Fed basically did this.
See the recently (Sunday) announced "Bank Term Funding Program", which basically says if banks hold securities from the Federal government, the Federal Reserve will accept it as collateral for a loan, the collateral valued at par.
https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm https://www.federalreserve.gov/newsevents/pressreleases/mone...
- s1artibartfast 4y agoThere is a world of difference between the FDIC offering loans to be paid with interest on securities and forcing other Banks to accept it in lieu of real currency. The Proposal is closer to the idea that you should be able to pay your cash debt with stock valued at your purchase price, and not at the current market price. It would mean that a bank that owes another bank $100 could instead pay with Bond currently valued at $50, and then go out on the market and buy two identical new bonds with the money they saved.