The debt they own has decreased significantly in value since because who wants to own a mortgage at 3% when new mortgages are at 6-7%? The sooner banks are forced to sell this debt, the more they lose.
Thus increasing the reserve requirement would force early sales of debt and make the bank go further into the red.
The Fed tells us everything is fine and we shouldn’t worry our pretty little heads. The Fed is the problem here. They are too close to the banks they regulate. This is yet another example of regulatory capture. Propping up a failed fractional reserve banking system now featuring no reserves.
I don’t want innocent depositors to lose their money but I do think it is high time to reconsider this experiment that is the Federal reserve.
Anyone who thought anything about COVID was temporary was deluded. When was the last time any temporary measure actually expired and stayed that way?
Also, we have to do something about the issue of regulatory capture. The Fed knew that hundreds of banks were insolvent as far back as September [0], yet they did nothing to protect depositors. Why not and why should we trust the Fed going forward given their terrible terrible track record?
The Fed gave us a decade of zero interest rates. The Fed told us there would be no inflation, then they told us inflation was transitory. As far as I am concerned the Federal Reserve is nothing more than a centralized public relations arm of the banking industry.
[0] https://mobile.twitter.com/balajis/status/163733241114198835...
Edit: Added a source