But if they are using bonds which the fed has valued at face value rather than market value as collateral then this is still effectively free money.
They are only losing .1% of bond value instead of the difference between face and market value.
They are only losing .1% of bond value instead of the difference between face and market value.
If the bonds were worth 80 cents on the dollar than they just traded 80 cents on the dollar for 99.9 cents on the dollar. A good deal if your balance sheet is in such poor shape.