If you are underwater on a bond, just hold it until maturity and you get 100% of your principal back. Basically, the Fed is going to redeem those securities early for the banks, which is very different then simply handing the banks dumptrucks of cash, like 2008.
Was just thinking about this today. I think it is actually a move to force the yield curve to change by causing the underwater institutions to shorten their horizon
If you are underwater on a bond, just hold it until maturity and you get 100% of your principal back. Basically, the Fed is going to redeem those securities early for the banks, which is very different then simply handing the banks dumptrucks of cash, like 2008.
Was just thinking about this today. I think it is actually a move to force the yield curve to change by causing the underwater institutions to shorten their horizon