Bank Term Funding Program (BTFP) Basics

 

Remember those bank failures nearly a year ago that had the banks being turned on their heads? Signature Bank, Silicon Valley Bank, etc. What happened to that concern. Things don't seem to have improved much, but the banks all seem fine. What happened. Well, I'll be honest - I wasn't blogging about economics back then and this even went past my radar ..... BUT ..... this is pretty incredible.... here's a direct overview from the Federal Reserve website. The Fed funneled an extraordinary amount of loans to banks in the form of the Bank Term Funding Program (BTFP). 

On March 12, 2023, the Board of Governors of the Federal Reserve System (Board), by the unanimous vote of its six members and with the approval of the Secretary of the Treasury (Secretary), authorized each of the 12 Federal Reserve Banks (Reserve Banks) to establish and operate the Bank Term Funding Program (BTFP) under section 13(3) of the Federal Reserve Act (12 U.S.C. § 343(3)). The BTFP makes funding available to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.

Here's the data they are required to post: 

 As of March 15, 2023: The total outstanding amount of all advances under the BTFP was $11,942,528,000.  The total value of the collateral pledged to secure outstanding advances was $15,885,798,000. The amount of interest, fees, and other revenue or items of value received under the facility, reported on an accrual basis, was $662,000.

March 2024 Data

As of January 31, 2024: The total outstanding amount of all advances under the BTFP was $165,237,527,000.

February 2024 Data

The total value of the collateral pledged to secure outstanding advances was $204,762,040,000. In addition, the Department of the Treasury is providing $25 billion as credit protection to the Reserve Banks.

So let me get this straight, in less than 12 months, they have issued $165,237,527 to the banks with unclarified payoff periods (as far as I can tell). 

Call it what you want, but this is nothing short of a bailout. This program ends soon and frankly, the economic situation is the same (if not worse) in terms of items banks have loans out like Commercial Real Estate. 

It will be interesting to see how the banks progress when this program ends. I have to think we will see another round of failures and/or bailouts. 

For more information on Snohomish County Real Estate, consider contacting a Commercial Real Estate broker.