It was simple, they had enough assets, but a significant amount was in long term treasury bonds. If they held them to maturity, their balance sheet would have been fine. But their value on the open market was less than face value because no one wants to buy a bond giving 1% when they could buy one at 5%.
If the Fed wants the easy solution, they'll just guarantee the face value of treasury bonds. Then companies will stop worrying about liquidity in these smaller banks.
It was simple, they had enough assets, but a significant amount was in long term treasury bonds. If they held them to maturity, their balance sheet would have been fine. But their value on the open market was less than face value because no one wants to buy a bond giving 1% when they could buy one at 5%.
If the Fed wants the easy solution, they'll just guarantee the face value of treasury bonds. Then companies will stop worrying about liquidity in these smaller banks.
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