Re:US banks have $620B of unrealized losses on their books
by laweijfmvo on Friday March 31, 2023 @01:34PM
(#35390329)
The Fed has also agreed to buy the worthless bonds from banks, should they need cash, albeit they expect repayment @ 4-point-something %, which I understand banks immediately took advantage of. I guess we'll just deal with that problem later, as usual.
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Re:US banks have $620B of unrealized losses on their books
by loeg on Friday March 31, 2023 @01:41PM
(#35390436)
The bonds aren't worthless. The important distinction of the new short-term Fed lending program is that the Fed loans against the face value of the bonds, rather than the market value.
Re:US banks have $620B of unrealized losses on their books
by laweijfmvo on Friday March 31, 2023 @01:59PM
(#35390722)
Thank you for clarifying
Re:US banks have $620B of unrealized losses on their books
by khuey on Friday March 31, 2023 @01:41PM
(#35390444)
AFAIK, the Fed has agreed to lend banks cash on a short-term basis against their devalued (hardly worthless) bonds at par. If you have a source for the Fed agreeing to buy bonds I'd be very interested to read it, because AFAIK the Fed is selling close to $100B of bonds a month.
Re:US banks have $620B of unrealized losses on their books
by JumpCrisscross on Friday March 31, 2023 @01:48PM
(#35390553)
> Fed has also agreed to buy the worthless bonds from banks
Not worthless, worth less. The Fed has always let banks borrow against Treasuries at the discount window. The discount is to their fair market value. They created a new mechanism, the BTFP, which lets banks borrow against the face value of their Treasuries at a higher rate [1].
[1] https://www.federalreserve.gov/newsevents/pressreleases/mone...