Federal Reserve’s banking bailout hits new weekly high of $103B

The US central bank’s emergency fund for troubled banks has seen the highest level of distressed asset redemptions since its inception three months ago.

The emergency loan program – known as the Bank Term Funding Program (BTFP) – was introduced in March amid the United States banking crisis, which saw the collapse of Silicon Valley Bank. The purpose of the fund is essentially to support banks and other depository firms.

The Fed’s Bank Term Funding Program (BTFP) has reached a record level, according to data from the Federal Reserve Bank of St. Louis. level Debt of $103.08 billion for the week ending June 28.

The milestone figure means the Fed is still bailing out banks, despite efforts to reassure investors that the banking crisis is over.

Market analyst Joe Consorti also echoed the latest data, claiming that “the Fed’s shadow liquidity is fueling risk-on behavior in the markets.”

This, he said, can encourage investors to take on larger risks as evidenced by the rise in stock markets such as the S&P 500.

Emergency lending from the Fed’s BTFP facility rose to $103.1 billion this week – a new high.

No wonder, as BTFP usage increases (and banks’ UST deficits are erased) the S&P 500 rises as well.

BTFP = Buy F*King Ponzi pic.twitter.com/MZCr5oO7aY

— Joe Consorti ⚡ (@JoeConsorti) 29 June 2023

“Imho the Fed will definitely have to create a new facility to buy distressed CRE loans and maybe CMBS,” the consortium said, referring to commercial real estate and commercial mortgage-backed securities.

According to reutersUS banking regulators are asking lenders to work with credit-worthy borrowers facing stress as commercial real estate lending comes under pressure.

Furthermore, the BTFP peak came the same week that the Federal Reserve announced its banking stress test results, traversing the nation’s top 23 lenders.

Connected: Concern over banking crisis reaches unprecedented level since 2008 – survey

American banks are not the only ones in trouble. according to bloomberg reports Earlier this week, Germany’s Bundesbank may need a bailout to make up for losses on bonds acquired as part of European Central Bank asset-buying programs.

The Telegraph reported that this is a widespread problem because “after such central bank printing of trillions of dollars around the world, the chickens are coming to roost”, as banks are drowning in debt amid rising interest rates.

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