1.5 Trillion!

[BmorePat87]

(03-15-2020, 12:58 AM)NATI BENGALS Wrote: I still don’t fully understand it. “Backed by treasury securities”? So if they loan this money out to someone who doesn’t pay it back what happens? Say one of the many companies who are currently losing money at a stupid rate, who takes a loan, makes a shitty business decision and then files bankruptcy.

They were going to hand this money out pretty quickly I thought? So there isn’t a lot of vetting and determining if there is a good business plan?

We have the self proclaimed king of bankruptcy leading the federal government. I can guarantee some of his cronies are funneling in some of this money. And if the orange anus can become prez after bankruptcies out the wazoo.

They gave them the money and the institution gave them treasury bonds worth the same amount. If they can't buy it back, another bank will. Banks do the same thing with each other every single day: they exchange money when they have more than they need to banks who need more liquidity with the agreement that the lender will get more money back. 

They aren't lending it to failing companies, they are lending it to any financial institution who have the collateral (bonds) and needs more liquidity. The point is to ensure that there's enough liquidity to fund day to day lending. When the Fed then need to decrease liquidity, they will sell bonds (which they were planning on doing after the tax season once tax checks are cashed and the banks need less on hand).

Banks keep a chunk of their money tied up in bonds because they're backed by the Fed. It's safe and helps prevent collapses.
The Fed operates outside of Trump.