When do banks have to pay the money back?

[PAULinSC]

So the Fed lends all this money through the TAF and TSLF, and it's a 28 day loan right?

So what happens after 28 days? I'm guessing the banks aren't performing a miracle and making money again. Do they just go back to the Fed and ask for more money when the 28 days are up?

Does anyone know a good way to explain what is really going on with the commercial and investment banks borrowing this money?

 

[tmosley]

They probably just get more and more money on loan until they are making money again. Then they live the rest of their existence (can't really say life) as the Fed's lap dogs.

 

[TulsaRevolution]

They use that 28 days to cannibalize each other, sell assets, lay people off, restructure, find other investors, foreign money, what not, to keep them afloat. So instead of just collapsing, they have 4 extra weeks of borrowed time to get their stuff together, or shut their doors. That cannibalization period is where big dogs like JP Morgan or Warren Buffet can step in and seize assets for pennies on the dollar. The panic is averted, because the banks don't just shut down and take everyone's money. But, it still isn't a rosy picture.

 

[davver]

They roll it over. It's like when Nixon "temporarily" suspended the convertibility of the dollar to gold in 1971.

 

[buffalokid777]

They probably just get more and more money on loan until they are making money again. Then they live the rest of their existence (can't really say life) as the Fed's lap dogs.

In laymen's terms you are on the right track......

The real key is you're statement "Until they are making money again"

The fed is giving them liquidity to stay in business and make enough money to write off their bad debt without collapsing.......on the backs of the people who will pay for it via inflation......

 

[PreciousMetals]

and if th people can stand it? cant pay.. how?

 

[scooter]

Not everyone who is using the TAF is doing so because they are in trouble. The TAF has turned out to be a ridiculously cheap method for banks to get extra cash reserves. There are a lot of them using the 28-day loans to get money, put it to work, and make profits.