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Setting-Up a “Crash?” [Yes.] Federal Reserve PULLS more than HALF of Credit Available through Bank Term Funding Program (BTFP)

Hal Turner Nation November 15, 2024 Hits: 15111

The Federal Reserve “pulled” about thirty billion dollars ($30 Billion) of available credit from its Bank Term Funding Program, and many people are saying this lack of liquidity for banks, is going to cause a “crash..”

Financial Gurus are sounding the alarm on social media:

In response to the 2023 United States banking crisis in March 2023 involving multiple failures of American banks, in 2023 the United States government took extraordinary measures to mitigate fallout across the banking sector.

On March 12, the Federal Reserve created the Bank Term Funding Program (BTFP), an emergency lending program providing loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions that pledge U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral.

The “Bank Term Funding Program” was designed to provide liquidity to financial institutions, following the collapse of Silicon Valley Bank and other bank failures. It was also created to reduce the risks associated with unrealized losses in the U.S. banking system, which totaled over $600 billion at the time of the program’s launch.

Funded through the Deposit Insurance Fund, the program offers loans of up to one year to eligible borrowers who pledge as collateral certain types of securities including U.S. Treasuries, agency debt, and mortgage-backed securities.

Financial Gurus are saying that the federal reserve bank, “pulled” over half of the available credit in the Bank Term Funding Program and this, they say,  will have the effect of putting massive stress on banks. 

According to these financial people, SOME banks won’t be able to cover cash withdrawals.   This is NOT because the banks don’t have the funds, but because the bank’s funds are locked-up in things like Treasury Notes.  Little solace to a depositor who needs cash, now, or companies that need cash for things like payroll or inventory.

Some of these financial gurus are pointing out the very strange TIMING of the federal reserve’s move:  The days AFTER the November Election.   “It’s almost as if they timed this, so that if the “wrong” candidate won the election, they could pull the rug out from the entire economy” said one financial guy.

Other financial observers say that Federal Reserve Chairman, Jerome Powell, “handed Trump a ticking time bomb”:

If bank’s money is tied-up in Treasury Notes for a fixed term, and the federal reserve has now pulled credit from the Bank Term Funding Program, then how will banks meet their cash needs if the federal reserve won’t give them the credit to get the cash from them?   Answer: They won’t