The Fed raised their rates in order to tighten credit, cool the economy, and cause layoffs. And they had to have known that people would start defaulting on their debts. I think that’s the main driver here.
A new facility that was enacted by the Treasury will provide help to these banks by allowing them to place these underwater bonds at the Federal Reserve at full price.
The Fed raised their rates in order to tighten credit, cool the economy, and cause layoffs. And they had to have known that people would start defaulting on their debts. I think that’s the main driver here.
My understanding is that the government knows these banks are insolvent from underwater bonds, and quantitative easing is how they’re trying to keep that swept under the rug. It’s some hat trick around the bonds’ values.
The bonds are underwater as a direct result of the Fed raising rates, and they knew, or should have known, that this would happen.
I think this is the QE hat trick currently in play to rescue banks: https://longviewfa.com/how-the-banking-failures-unfolded/