4 ms·

> Nothing about those Treasuries has actually changed other than the fact that they earn less interest than a newly issued treasury and if BoA needed to sell th

> Nothing about those Treasuries has actually changed other than the fact that they earn less interest than a newly issued treasury and if BoA needed to sell them quickly, they would be worth less than what they were paid for. They bought them with money that isn't theirs and if they were to sell them all to return people's money then they would be bankrupt. So yes, a lot about those Treasuries has changed as the value of the asset is based on time and rate. Those Treasuries do in fact have a market price and although they'd return all their principal eventually, it isn't today and is actually a long time from today. It's completely disingenuous to say "nothing has changed". Nothing has changed other than the fact that the market value of the treasury is far less than what the bank could stand if forced liquidate them. Only a fool would keep any sort of serious money with BoA that isn't FDIC insured, etc.

qaq 3y ago
If BoA failed all US Banks and in turn all world banks would collapse. The chances that FED does not bail em out is 0.
RandomLensman 3y ago
BofA isn't just funding itself only with deposits (and how is that split between term and demand deposits). There is funding via bonds and repos, for example, and those bonds provide long-term funding.
RC_ITR 3y ago
>Those Treasuries do in fact have a market price and although they'd return all their principal eventually, it isn't today and is actually a long time from today. Yes, and if people don't run the bank, then they can hold on to those Treasuries until they mature? I agree if they have to sell today, that's bad, but again, that's also true of any bank selling through any type of illiquid assets. We just got used to interest rates going down for 40 years and this not being a problem (banks got run for different reasons back then).

qaq 3y ago

If BoA failed all US Banks and in turn all world banks would collapse. The chances that FED does not bail em out is 0.

RandomLensman 3y ago

BofA isn't just funding itself only with deposits (and how is that split between term and demand deposits). There is funding via bonds and repos, for example, and those bonds provide long-term funding.

RC_ITR 3y ago

>Those Treasuries do in fact have a market price and although they'd return all their principal eventually, it isn't today and is actually a long time from today. Yes, and if people don't run the bank, then they can hold on to those Treasuries until they mature? I agree if they have to sell today, that's bad, but again, that's also true of any bank selling through any type of illiquid assets. We just got used to interest rates going down for 40 years and this not being a problem (banks got run for different reasons back then).