Banks are borrowing funds from the Fed so they can afford customer withdrawals. Read that again and again.
Discussion
Rulers and the plebs
Infinite
Debt
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Aren't they getting a loan for the value of the bonds once theyve mature?
The loans are for up to a year and up to the value of the collateral put up by the banks, which can be treasuries, mortgage backed securities, and other qualifying assets. The idea is that the banks don’t have to sell assets at a loss to fund customer withdrawals. The assumption is that within a year when the loan is due those assets will be sufficiently valued to cover the cost of the loan. What happens if they’re not?
And other banks don’t care if they or their partners have exposure to these banks because the fed is making them whole. HELLOOOO
It's almost as if we live in clown world.
