[HPMOR]

The Bank Term Fund Program (BTFP) allows banks to pledge their underwater MBS as collateral to borrow at par value from the Federal Reserve. This lending facility is a stop gap measure and still requires repayment from the banks if they utilize this facility, within a one year time. If the banks do not pay back the loans, then that means they have defaulted and will be seized by the FDIC or Federal Reserve. The Treasury department has promised to cover $25 bn in losses for this program to the Federal Reserve but it’s unlikely this fact will be used. This program is giving free money in the sense of providing below market cost of liquidity but, it is not even close to the Troubled Asset Relief Program in 2008 or Payroll Protection Program in 2020.

[CSMastermind]

I see, thank you for clarifying.