DislikedYes it is a recipe for disaster. It is just that at this time, these mortgage-backed securities are absolutely worthless. They can't sell them, and they have to have liquidity because of all the investment withdrawals and other obligations they currently have.
Either the banks think that the feds will lower the rate, this whole thing will turn around, and they will be able to sell these securities again, or they think the federal government will cover the immense losses they are about to incur.Ignored
Humble Lifetime Member