I wouldn’t call it blackmail when they’re holding trillions of dollars of paper they bought in good faith. Should they just suck it up and take a trillion dollar loss on what was touted as being among the most secure of investments?
No, it wasn’t touted as the most secure of investments. Their prospectus - isn’t it quaint that anyone would actually read such a thing - explicitly they were NOT backed by the Federal Government. Thus FMN/FRE bonds paid a higher premium (interest) than Treasuries.
So now we’re compensating people (bondholders) who have already received a risk premium. Maybe they should give back to taxpayers that rate differential.
Heck, maybe they should just have stuck with Treasuries.