You’re the one who said “The loans we are talking about are from the government and don't need to stick to market rates if the government doesn't want them to.”
I’m lost. The FDIC doesn’t take public money but it will receive loans from the government?
If you mean that the Fed will give an zero-interest loan with the bond as collateral that’s the same as just buying it right away at par and eat the loss.
Put otherwise, the Fed lends money at almost 5% now. If it does it at 0% it will be earning less than if it was done at the proper rate.
In either case, the treasury will get less money in the end. That looks like costing money to the taxpayers.
Doesnt the Fed receive interest on bonds/money 'loaned to the government' - but any profits are then sent to the Treasury?
So if the taxpayers are paying interest to the fed, who then feeds those profits back to the trasury, and the treasury uses that money for scenarios such as this - doesnt that automatically mean the treasury/FDIC is using BOTH public taxpayer money (laundered through the fed back to the treasury) AND the bank payments to the FDIC in order to cover that?
Are these two separate piles of money - and they will not take from the "profits" the Fed made on taxpayer debt on money printed by the Fed to the USG, but only from the FDIC fund that the banks pay fees to?
Something always feels 'fishy' when you dont have a deep grasp of the structure... so, please ELI5?
