A bank has 10 year bond which trades 90 cents on the dollar on the open market. It gives the bond to Fed as collateral and receives 1 dollar. It uses this dolla

A bank has 10 year bond which trades 90 cents on the dollar on the open market. It gives the bond to Fed as collateral and receives 1 dollar. It uses this dollar to buy bonds on open market with rate higher than cost of the loan, after 90 days it sells the bond, gives the Fed 1 dollar and interest, and pockets the rate spread on 10 cents.