An interesting cohencidence of events around the upcoming March 11, 2024 BTFP end date. (This post puts together a lot of prior DD.)
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On March 11, 2024, BTFP will stop making new loans. [Federal Reserve Discount Window, Federal Reserve BTFP FAQ A.5]
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Which is the day after the OCC Proposal to Reduce Margin Requirements to Prevent A Cascade of Clearing Member Failures would go into effect if the SEC doesn’t block it (as 45 days from Jan 25, 2024 is March 10, 2024).
That’s right! The OCC Proposal to Reduce Margin Requirements to Prevent A Cascade of Clearing Member Failures should go into effect just in time to reduce margin requirements for everyone who needs liquidity from the BTFP.
🦵🥫So clearly the OCC Proposal to Reduce Margin Requirements to Prevent A Cascade of Clearing Member Failures is the next major MOASS can kick after BTFP ends. (Basically, instead of banks borrowing from the Federal Reserve at the full face par value against low market value assets via BTFP, the OCC will simply waive margin requirements.)
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BTFP was established on March 12, 2023. [Federal Reserve Discount Window, Federal Reserve BTFP FAQ A.4]
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Banks [Have Been] On The Brink Of Bankruptcy since March 2023 and, per that DD, Banks would be bankrupt already if it wasn’t for BTFP.
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As BTFP will stop making new loans as of March 11, 2024, Wall St, Clearing Agencies, and regulators have been setting up the Pension Pilfering Playbook ever since the GME Sneeze to shift losses over to pensions & insurance companies in the OCC’s Non-Bank Liquidity Facility.
Basically, now that the pension pilfering plumbing is in place to shift losses over to pensions as Kenny “predicted” (May 2022), the Federal Reserve might actually stop injecting as much liquidity into banks. A key aspect of the OCC Proposal to Reduce Margin Requirements to Prevent A Cascade of Clearing Member Failures is that a Financial Risk Management (FRM) Officer will have the “authority to implement idiosyncratic control settings for an individual risk factor” – meaning that FRM Officer has the authority to rubber stamp a margin reduction, or not and force a margin call. A curiously powerful position allowing the OCC to selectively choose which Clearing Members survive (with reduced margin requirements) or fall (Margin Call); and when1.
Normally, the FRM Officer just approves margin reductions. But doesn’t have to…
OCC’s PROPOSAL GIVES THE POWER TO PICK WINNERS AND LOSERS
As liquidity dries up from BTFP loans ending, at risk banks, savings associations, credit unions, and other eligible depository institutions [BTFP FAQ B.1] will be reliant on the OCC to waive margin requirements. The OCC can waive margin for the ones chosen to survive and margin calls the ones chosen to fall.
BTFP “offers advances of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions” which means that starting from March 12, 2024 the OCC can start picking losers by rejecting margin waivers, if the SEC doesn’t object to the OCC Proposal to Reduce Margin Requirements to Prevent A Cascade of Clearing Member Failures.
Thank you to all the apes who have submitted comments against the OCC Proposal to Reduce Margin Requirements to Prevent A Cascade of Clearing Member Failures. There are well over 2500 comments just in the templates plus a long list of apes who wrote their own comment letters. There’s still time to get into the history books and comment so you can also say I Told You So!
Heroes, all of you.
Despite our unprecedented input into the rulemaking process, I suspect the SEC will allow the OCC proposal2 (again), because this OCC proposal gives the OCC control over which entities bite the dust and when; very likely kicking the MOASS can until they can’t and/or trying to control MOASS with a “controlled burn”. The OCC proposal is simply “God Mode” powerful as the OCC’s FRM Officer can basically waive margin requirements for everyone until the OCC decides not to; at which point the FRM Officer can selectively take out Clearing Members. (A very powerful enforcement position ensuring Clearing Members either play ball in the rigged game or else be taken out.)
I think the winners and losers have almost certainly already been chosen in our rigged financial market3. With the pension pilfering plumbing in place, all that remains is for the SEC to let the OCC give themselves the ability to margin call the chosen losers while waiving margin requirements for the surviving winners. Once that is approved (or, perhaps more accurately, simply unopposed by the SEC) on March 10, 2024, margin calls for the chosen losers can begin as early as March 12, 2024 as the earliest year-long BTFP loans start expiring (with more recent loans expiring up to March 11, 2025).
[1] Per the Pension Pilfering Playbook, if the OCC knows when a Clearing Member is about to default, the OCC can trigger the Master Repurchase Agreements (MRA) to force a Non-Bank Liquidity Participant (e.g., pension fund or insurance company) to buy collateral just before the collateral value falls so that the OCC can trigger the MRA again to force selling that collateral back to the OCC cheaply. With the OCC’s FRM Officer making the decision of when a Clearing Member defaults, the OCC controls when and which Clearing Member defaults, which gives the OCC the ability to perfectly time selling high to those pension funds and insurance companies.
[2] Speak up or forever hold your peace. Just because the SEC may allow the OCC proposal doesn’t mean we should be quiet about this. They’re going to approve it if retail remains silent so what have we got to lose speaking up? How often do you think you’ll get to be on the record on the right side of history?
[3] Ironically, there’s a possibility one or more of the chosen losers might resent getting kicked out of the rigged market and could be willing to advocate for a fairer market. The enemy of our enemy could be a friend. Or, perhaps, a whistleblower; which also pays well.
Original Source: Reddit
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