Why the #BTFP? Why the FED needs to lend to banks and buy their underwater treasuries to protect against a massive sell off or them.

Banks often invest a significant portion of depositors' money in government bonds due to their perceived safety and liquidity.

However, when the central bank, like the Federal Reserve, raises interest rates and new bonds are issued at higher yields, the value of existing bonds may decrease.

This interest rate risk can lead to a reduction in the market value of the bonds held by banks, affecting the collateral used to secure customer deposits.

If the decline is substantial and not adequately managed, it could potentially threaten the bank's solvency, highlighting the importance of effective risk mitigation strategies in the face of changing economic conditions.