Nearly half the money — $143 billion — went to holding companies for the two major banks that failed over the past week, Silicon Valley Bank and Signature Bank, triggering widespread alarm in financial markets.
"Lent" is the operative word that means it's not a bailout. Under TARP, the government bought the garbage assets from the banks above market value which made them solvent. The situation with the CDOs was also much worse in 2008 than the current treasury problem.
The federal reserve isn't buying the treasuries outright, but it is accepting them as collateral at par value, which means that it is allowing banks to borrow more than they normally could, but it only repairs the bank books in the sense that they may not need to record the current market value of the treasuries they own. If withdrawals happen too fast, they'll be selling treasuries en masse to no one and further drive treasuries down in a spiral that will drive more banks under. 10 year treasury yields have gone down, which may be because banks aren't selling them and are borrowing from the fed instead.
I think this only extends the runway a bit so I think we'll get to real bailouts eventually, or the federal reserve will push yields down again and that will fix the books. Because the banks have treasuries that pay 1.3% and they're being allowed to borrow more at 4.5%, which will only make them more insolvent over time if nothing else fills the gap. But it's possible that this is enough because the bonds will return to par value over time and interest rates might go down again which both means the market value of the bonds will go up, and banks will have more time to lend mortgages at higher rates, making banks solvent again. But people don't want to borrow at these rates either.
"Lent" is the operative word that means it's not a bailout. Under TARP, the government bought the garbage assets from the banks above market value which made them solvent. The situation with the CDOs was also much worse in 2008 than the current treasury problem.
The federal reserve isn't buying the treasuries outright, but it is accepting them as collateral at par value, which means that it is allowing banks to borrow more than they normally could, but it only repairs the bank books in the sense that they may not need to record the current market value of the treasuries they own. If withdrawals happen too fast, they'll be selling treasuries en masse to no one and further drive treasuries down in a spiral that will drive more banks under. 10 year treasury yields have gone down, which may be because banks aren't selling them and are borrowing from the fed instead.
I think this only extends the runway a bit so I think we'll get to real bailouts eventually, or the federal reserve will push yields down again and that will fix the books. Because the banks have treasuries that pay 1.3% and they're being allowed to borrow more at 4.5%, which will only make them more insolvent over time if nothing else fills the gap. But it's possible that this is enough because the bonds will return to par value over time and interest rates might go down again which both means the market value of the bonds will go up, and banks will have more time to lend mortgages at higher rates, making banks solvent again. But people don't want to borrow at these rates either.
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It's not 0% interest. They need to pay more than the treasury collateral generates.