Michael Howell: Can The Fed Keep Raising Rates During A Banking Crisis? | Michael Howell
Forward Guidance
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Is the Fed's Liquidity Problem or a Solventity Issue?
Is this primarily a liquidity issue in the banking system, or do you think it's a solvency issue? Depending on what your answer is, does that impact your view of what the Fed ultimately will do? I think the first thing is, yes, it is a liquidity problem. That's why I've said it's the banks that are really getting hit here, not really the borrowers. And that's telling you it's about funding and liquidity, and there's a problem. There could well be ultimately a solvence problem, because at the end of the day, if you look at the bank term funding program... The Federal Reserve is embedding now and operating loss in these
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