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Bank Term Funding Program

The Bank Term Funding Program, aka BTFP is the new money printing vehicle US regulators, FDIC and the FED, have invented to try to stop the bleeding on SVIB and avoid a systemic deposit run. Maybe the real underlying problem is Fed funds rates are yielding 4.5% overnight and money market accounts are paying depositors 0.48%. Why not take a bank deposits and use it to buy a T-bill with a 5% annualized return with a better risk profile than a bank. And then let the #fed provide liquidity to banks at 50 bps so they can keep buying treasuries and MBS while the FED unwinds QE. The whole financial system has a huge interest risk management problem. BTFP does not solve this problem.


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Source: Bianco research


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