Did you happen to catch the Financial System adjusting the way it does business right before your eyes?
No worry, if you said no… it was not super obvious, but worth a quick review for future knowledge…
So here we go!
BTFP- Bank Term Funding Loan Program Makes Adjustments to the Financial System
As we explained in great detail here in this post in March, the Federal Reserve set up a Backstop program for struggling banks. As several more banks have had issues, the creation of this program has changed the way mergers or buyouts will occur while this plan available.
If you are an acquiring bank, no matter desire, you would be crazy not to wait until your desired bank, if under stress, hits up the Federally backed program aka BTFP, as the Government essentially will guarantee much of the buyout once entering the program.
While it may seem unfair or counterproductive to price discovering markets and mergers, possible unintended consequences created from this program…. they are what they are … and look to continue until we are beyond the rain clouds….
Have a Great “Watch the Financial System Adjust” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth