Liquidity is being able to sell, it is relative to price
There is no "fair price". Price is a scaler, it has no morals or ethics
Fair price in the sense of "you get the same price if you want to sell and if you want to buy".
It's not true that "Anything is liquid if you will lower the price enough" if we understand liquidity in the usual sense.
Bonds and stocks are liquid because the bid-ask spread is small. It doesn't matter if you bought the bond at $1000, if you can get $799 for it and it would cost you $801 to buy one you may be unhappy but your problems are unrelated to liquidity (of course that $800 market price has nothing to do with ethics or morale).
A lingot of gold is more liquid than a gold tiara.
A participation in a private company is not liquid. Being able to sell it with a large enough discount doesn't make it a liquid asset.
Surely they did sell those treasuries without any hiccup. (I'm not 100% certain about the MBS they hold but the main problem is that the fair value is down and not the discount relative to that price that would be required to sell quickly.)