Federal Reserve Board announces the Bank Term Funding Program (BTFP) will cease making new loans as scheduled on March 11 (watch AU/AG/DOW this week)

Federal Reserve ^ | 1/24/2024 | FED

[C210N]

The Federal Reserve Board on Wednesday [ed: Jan 24] announced that the Bank Term Funding Program (BTFP) will cease making new loans as scheduled on March 11. The program will continue to make loans until that time and is available as an additional source of liquidity for eligible institutions.

During a period of stress last spring, the Bank Term Funding Program helped assure the stability of the banking system and provide support for the economy. After March 11, banks and other depository institutions will continue to have ready access to the discount window to meet liquidity needs.

As the program ends, the interest rate applicable to new BTFP loans has been adjusted such that the rate on new loans extended from now through program expiration will be no lower than the interest rate on reserve balances in effect on the day the loan is made. This rate adjustment ensures that the BTFP continues to support the goals of the program in the current interest rate environment. This change is effective immediately. All other terms of the program are unchanged.

The BTFP was established under Section 13(3) of the Federal Reserve Act, with approval of the Treasury Secretary.

[C210N]

The only prior FR mention of BFTP is from December here:

Fiscal Inferno! Banks Draw On Term Funding Program (BTFP) As Consumer Sentiment Remains Bleak (Newsom Defaults On $20 BILLION Federal Loan)

I do not know how much banks have been relying on, and in need of BFTP, but with its ending tomorrow, gold silver and stocks should be interesting. And, by that, we'll get an early glimpse at 6 PM tonight, when pre-markets for AU/AG open and DOW futures startup. Also, consider that gold is resting around the new high of 2180.

I'll mention that I don't believe gold is rising at all... it is just staying the same, as it always has, for 5000 years. It's the fiat TP we refer to as a "dollar", which in fact is not money, but just plain old debt, that is falling.

[packagingguy]

Can someone with knowledge about banking tell us if this means doom for small and midsized banks?

I have heard they are vulnerable.

[EEGator]

My understanding is that regional banks have heavy exposure to CRE.
Hopefully more knowledgeable FReepers will chime in.

[GOPJ]

I do not know how much banks have been relying on, and in need of BFTP...

Let's hope it's ending because it was 'too much of a good deal'... and not some of the other options.

[C210N]

I’m hearing that BIG banks (BOA and the like) are closing many branches. I think I heard north of 40 for BOA in a few weeks window.

I’ve moved fiat (not money) from BOA to my regional bank.

Bear in mind that no bank is safe from a systemic failure, where FDIC and the like are useless.

But, I think the big banks are the most vulnerable, and there is relative safety in small banks

[C210N]

It’s ending at a time of higher interest rates, with the FED between a rock and a hard place (can’t really raise ‘em, can’t really lower ‘em), and tremendous amount of bank assets under water due to the rapid interest rate rise. If a bank has to liquidate assets to cover depositors, they will take huge losses.

“U.S. bank profits drop 44% in Q4 as big firms cover failed bank costs “, story 3 days ago.

Powell last week said to expect more bank failures.

NYCB got a $1B bailout last week.

[billorites]

For times like these...

[packagingguy]

Thanks for the answer.

Now that you mention BOA you’re right.

There’s only a few branches anywhere around here.

[C210N]

BRICS: Bank of America Issues Warning of a US Dollar Collapse

In 2023, Bank of America closed down more than a hundred branches and has already scheduled the closure of dozens more. This information was reported by the Office of the Comptroller of Currency (OCC), which requires banks to report all closures to the federal agency. The bank is adjusting to the reduced demand for in-person services, which has led to the closure of some branches and the opening of others. The aim is to reduce the number of low-traffic offices. Unfortunately, this means that clients may have to travel longer distances to reach their nearest branch. Over the past decade, the distance that customers, especially those living in rural areas, must travel to reach their nearest branch has been increasing.

Where are branches set to close in 2024?

[Honest Nigerian]

The meaning of that article/post is about as cloaked as the stuff Alan Greenspan would say.
Just more fear-porn-panic fuel?

[Leaning Right]

> I’ll mention that I don’t believe gold is rising at all... it is just staying the same, as it always has, for 5000 years. <

Someone once noted that throughout history one ounce of gold would buy you a first-class set of clothes. Not much more. Not much less.

So, yeah. You might have a point.

[GOPJ]

Powell last week said to expect more bank failures.

I'm hoping my bank is 'too big to fail'...

[fretzer]

>Where are branches set to close in 2024?

https://freerepublic.com/focus/f-news/4223094/posts
https://www.dailymail.co.uk/yourmoney/article-13160397/bank-closure-wells-fargo-bank-america-pnc.html

[GOPJ]

You would have to know the right’ small banks. How would you research that?

[cgbg]

This thread seems to be confusing two different things:

—Bank liquidity

—Bank solvency

Liquidity is do you have enough cash or a way to get enough cash to pay depositors when they demand money.

Solvency is the state of the bank’s balance sheet, the assets vs the liabilities.

Liquidity matters to depositors.

Solvency matters to shareholders.

The FDIC is insurance for liquidity up to 250,000 per account. The FDIC is technically insolvent but it highly likely Congress would bail them out if they ran out of cash.

Any small or medium sized bank with significant office building holdings is probably insolvent—but they are not forced to face reality until bank examiners show up and crunch the numbers. At that point the federal regulators can order them closed if they wish. If that happens the depositors have their money put in another bank.

[Melinda in TN]

What about credit unions. My credit union claims to be safer than banks.

[C210N]

The main way would be your local grapevine, ask around, especially your conservatively-minded and financially-astute friends and acquaintances. You have local republican clubs? Well they have treasurers. Know anybody on your local FINCOM (Finance COmmittees)?

Beyond that, the “dry” method, is to check their filings. Start googling. Is a small bank owned by a much larger one? Is it a state-established-bank, or a glowBullista. Look at their federal/state financial reportings.

[Lockbox]

US Dollar Collapse?

What would a government do if this may be coming true? Hire ARMED Tax Collectors! If this happens we are screwed!

WHAT?

Biden's hiring and arming IRS agents? RUN!

[C210N]

Consider systemic failures.

That’s where I believe we are headed. And, not because of any inaction, but by designs. The system MUST fail, fiats don’t last more than a few hundred years. The so-called “debt”, which is a fallacy in itself, because a dollar by definition is debt when it is printed into existence.

Expect the $34T and the bigger $250T beside it in other accounts, to be wiped clean in a black-swan reset.

We’ve never really paid any principal whatsoever to the “national debt”, system is not designed for that to happen. Only thing that has mattered was an ever-increasing M2 money supply. The notion of the FED reigning in inflation to a 2% target is ridiculous - it’s like a mugger taking 2% of what you have, compounded every day.

Liquidity/solvency will no longer matter in that specific scenario.

[C210N]

Great question, dunno. Find out... post!