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All they had to do was freeze withdrawals for 10 years and it all would have worked out fine.

Right. But that is exactly the distinction between being illiquid and being insolvent.

> a liquidity crisis, not insolvency

Ish. On a mark-to-market basis they had insufficient reserves. That's closer to insolvency than illiquidity. The mismanaged duration is closer to illiquidity. But not of the sort a lender of last resort could save them from.

No it isn't? Not having access to enough quickly enough is a liquidity crisis; not having enough even when it is all liquidated is insolvency.

The income from them is safe, but the value of them is not.

Same with their mortgage-backed securities.