Why Is The US Treasury Suddenly Concerned About "Loss Of Market Access"

Tyler Durden's picture

Earlier we revealed that one of the key topics of discussion during yesterday's quarterly meeting of the TBAC committee with government workers (including Under Secretary for Domestic Finance Mary Miller, Assistant Secretary for Financial Markets Matthew S. Rutherford, Deputy Assistant Secretary for Federal Finance James G. Clark, and Director of the Office of Debt Management Fred Pietrangeli, and two NY Fed staffers, Nathaniel Wuerffel and Lorie Logan) was whether or not markets had become far too complacent, there was another, even more important topic of discussion than simply the beaten dead horse which is the fate of manipulated stock markets.  The topic: the US Treasury suddenly losing access to capital markets.

This is how the Treasury framed the discussion:

Pursuant to the Committee’s request at the April meeting that Treasury present a cash balance management framework that mitigates certain risks, DAS Clark began his presentation by reviewing Treasury’s current cash balance objectives.  He explained that Treasury’s main sources of cash are susceptible to risk, noting that Treasury has historically focused on risks associated with errors in fiscal forecasting.  Clark stated that several events had made it clear that market access and settlement risks could also potentially impair Treasury’s ability to fund government expenditures for several business days.


A detailed discussion ensued amongst Committee members around the benefits and potential concerns related to holding a higher cash balance in order to mitigate the consequence of losing market access.  The Committee concluded that it would be cost effective and prudent for Treasury to hold a higher cash balance.  They suggested that Treasury should continue to analyze the details of maintaining a higher cash balance and present its findings at an upcoming TBAC meeting.

In other words back in April, the US Treasury for reasons unknown, tasked the TBAC to consider levels of cash funding needs for the US treasury as a result of "certain risks."

Specifically as a result of "several events" among them the December 2, 2013 delay of a 4 week bill auction due to IT issues, Super Storm Sandy in October 2012, and September 11, 2001, the Treasury has suddenly - five years into the recovery - gotten concerned that its ability to fund government expenditures for "several business days" could be "impaired."

As examples of market disruption, the Treasury mentions two: Hurricane Sandy: 1.5 days and September 11th: 2-3 days.

The TBAC then responds that the "Cash required to cover the worst 1-5 days since FY2009 is relatively constant at approximately $331 billion."


Here is what the TBAC finds: "Historically, Treasury has only had enough cash to withstand a loss of market access for approximately 2 days."


  • Treasury would have been protected against losing market access for 1 day roughly 80 percent of the time.
  • Treasury would have been protected against losing market access for 5 days less than 10 percent of the time.

But it is the TBAC's punchline that is most important:

If Treasury lost market access for a short period of time, the U.S. government would face a substantial cash shortfall.

  • Since the beginning of the financial crisis, on average, Treasury would have faced an $28 billion cash shortfall if market access had been lost for 3 days.
  • This shortfall increases to $89 billion if market access had been lost for 5 days and $239 billion if market access had been lost for 10 days.

* * *

Summarizing the story so far: after years of never even once contemplating how much cash the US Treasury has on eht books, suddenly, 5 years into the "recovery" the Treasury is suddenly very concerned about the level of statutory cash. Why? Fears over loss of "market access" such as those during a "glitchy" 4 week bill auction in December 2003 (implication: malicious hackers) or September 11 (implication: domestic terrorism accident).

And what is probably most disturbing is the TBAC's ultimate answer to the TSY's question whether it should hold more cash: 

The Committee concluded that it would be cost effective and prudent for Treasury to hold a higher cash balance.

Just in case, surely. Still, one wonders, do they know something we don't, and just what was unreported during the "framework discussion" phase, and just how long until the Treasury tests out its increased cash retention strategy, and most importantly: just what upcoming event could to the Treasury "losing market access"?

* * *

Full TBAC presentation (pdf)

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oudinot's picture

The largest government in the history of the world and they only have 2 DAYS inventory of ready cash when they don't have  to mint it just print it??????

What fucking shit!

The fuckers print the shit for nothing and they have only 2 days inventory.

What the Fuck.

Fuck me.

Dr. Engali's picture

Don't forget, our currency has to be borrowed into existence. They don't just print it.

disabledvet's picture

Yeah, well...not working too well when you have to borrow your recovery into existence too. "Everything points to more Detroits" to me. We're swimming in oil and natural gas liquids...and we're in a recession!???

"Get thee to a gold standard sinner!"

Luckhasit's picture

They tax that shit.  Ever fuckin dollar is unequal debt the gov cannot pay.

They is why Congress was suppose to over see this shit. Andrew Jackson knew the deal.

maneco's picture

I think you wil find this explanation very interesting. The main point is that the U.S. Treasury cannot print Federal Reserve Notes. You might say: "Why can't the Treasury print its own notes?" I would say the Treasury can but the last President that had the Treasury print its own notes was JFK and look what happened to him.


TeethVillage88s's picture

When I was a kid - I thought the reason we needed a Federal Reserve as a separate institution to manage our Currency was since Congress could not be trusted with it's powers of the Budget due to the Risk of Devaluing the Currency

Now we know better

- We could manage Regional banks for Cash Reserves to prevent Bank Runs
- Fed has damaged the currency as much as congress
- No Federal Government Credit Down Grade yet, since we are a super power
- Winner will be the Country or Countries that don't Debase their Currency as bad as the Other Currencies

- That thing about helping Jobs or Managing Inflation, that is BS, Never Happened

Cognitive Dissonance's picture

What about an unexpected 'event' such as Ebola?

fonzannoon's picture

100% agree with you CD

"A Mount Sinai spokeswoman, Dorie Klissas, said that to protect the patient’s privacy, the hospital was not making public his occupation, which country he had been in, whether he had been exposed to a patient with Ebola there, or whether he had close contacts like family members, friends or co-workers who were also at risk. Officials said they expected the results of the tests for Ebola in 24 to 48 hours."

This mfker was checked in on Sunday. Anytime they feel like announcing those test results they have been sitting on for a day, we are ready....

JRobby's picture

Sounds like DOHS to me

messymerry's picture

We will know within 30 days if Ebola is going to be let out...

A bit of trivia:  Facebook burns through 195 million man hours a day.  Do you know where your spouse and kids are???

Dr. Engali's picture

Translation; have moar than two days worth of cash on hand for the upcoming false flag.

Postal's picture

Having cash makes you a terrorist. And since "terrorism" (whatever that is) is illegal, and thanks to civil forfeiture, all your cash belongs to them. :/

disabledvet's picture

Treasury contracting out Secret Service now?

"Who's protecting the President today?"

"Uhhhhh. Looks like Joe Kaiserhoff and some dude named Fred."

"Okay! Great work Team!"

the grateful unemployed's picture

why are the guys who print money out of thin air worried about cash?

Winston Churchill's picture

Why do you think they are eyeing 401k's for ?

I will keeping saying it, the govt. WILL steal everything you have,their survival

is paramount, and fuck us serfs.Another warning right here.

How many warnings do you need ?

mayhem_korner's picture



I picture a 5-year old trying to bail the water from his sandcastle while the tide is coming in.

Quinvarius's picture

Please print us several weeks worth of slush money in advance.  Thanks!

saveUSsavers's picture

The just do currency swaps from phantum Belgium account, THEY ARE LIAR SACKS-A-SHIT , DON'T BELIEVE A WORD OF THESE FINANCIAL TERRORISTS

Yen Cross's picture

  One good solar flare and POOF!

  • This shortfall increases to $89 billion if market access had been lost for 5 days and $239 billion if market access had been lost for 10 days.  That's over 1/4 of a $ trillion in 10 days!

Alea Iactaest's picture

Why does 10 days = $239B if 5 days = $89B? Why not $178B? No wonder these guys can't balance the books, they can't add!

disabledvet's picture

Good point!

"Add a zero to that number just to be safe!"

onewayticket2's picture

it's a step chart, not a straight line.....

Elliptico's picture

But if we could just tap the bank accounts and 401k's of US citizens temporaily, mind you,....

Alea Iactaest's picture

Why temporary? Look at the back of any "money" in your wallet. It clearly states "Federal Reserve Note". They just want their property back.

Remember, money always returns to its rightful owner.

Atomizer's picture

That is the job of Gartman. 

Itchy and Scratchy's picture

Is the FED (taxpayer) not long 100% of all those high yielding 1% bonds yet?

yogibear's picture

If Russia wants to mess up the US it can start by tracing those Belgium buyers back to the Federal Reserve and their swaps.

One huge Ponzi scheme.

NOTaREALmerican's picture

Oh yeah,  and who ya gonna believe:  some ex-KGB Godless commie killer of babies OR YOUR Federal Reserve Bank?

(Cue:  Slow motion eagle flying in slow-motion, in front of a slow motion flag waving in slow motion, behind a slow motion patriot looking skyward with a slow motion tear in his slow motion eye.)

lotsoffun's picture

please, let us do the full thing.  with images of planes hitting burning towers in the background.

dear god (or allah, or jehovah, or buddha, or krishna) - i love this country.  our leaders and our laws simply

outstretch anything that was previously envisioned by any culture or country.

edotabin's picture

Well, these are our choices.  Fucked indeed.

combatsnoopy's picture

Puts on Real estate fund is surging.  The put option volume on dollars indicate it's gain, banks- especially Wells Fargo has high put bets against it.  


WTFUD's picture


Inthemix96's picture

What would happen to you or me if we were found to have a private printing press in our bedrooms, that printed the national currency at will, for nothing, from nothing, and for nothing, bar the cost of paper and ink?

Would you go to jail you filthy counterfeiting fucker?

Yes you would, so whats the difference for the suited fucking criminals then?

Just a touch more poke than you or I then?

Talk about 'Making Your Labour Value Worthless'.

These bastards live like leeches on all our skins.  Its about time we peeled the fuckers off.

Bunch of fucking cunts.

I woke up's picture

I'm a lurker here but read everything, when I see your posts I scan the text for the "c" word to be dropped.  If it's a good day I might see 2 or 3 from you and it always brings smile to my face.

Inthemix96's picture


Nice one I woke up, that means what I do works doesnt it?

Lets give these fuckers war then shall we?  And cheers for that mate, you made me smile.

The amount of times I have posted just this till I am blue in the face must be worth fucking something;-

'We, The, People.  We, Will, Be, Heard'.

And I have no fucking doubt we will be.

Smile and wave mate.....


r00t61's picture

Every time Inthemix posts, I am reminded of the "Irish Wanking Bankers" video.


Keep it up my ZH brother.


Son of Captain Nemo's picture

Might want to save this one and remember where you were and what you were doing the day you read it!...

Fix-ItSilly's picture

Havenstein didn't allow such a problem to exist.  Why is Lew, representing a Govt "of, by and for the people, subservient to Dimon?

Pres. Jackson solved this problem.

cougar_w's picture

Like picking up trillion dollar coins in front of a steamroller.

trebuchet's picture

I draw two conclusions from this.


1. Treasury needs to issue more debt 

2. Fed has one more reason to follow its QE exit plan


ekm1's picture

This must be a joke, right?

Access to "markets"? Whaaaat?


Didn't Bernanke himself said that "we just mark up or down digits on computers" at 60 Minutes years ago trying to explain QE?


There is no 'financial market'. It is suspended.

There is only 'financial video game', that's why world is abandoning USD

ekm1's picture

Either swaps implode and about $20 trillion is extinguished and oil goes down to $50 max as stays there for a while, or.............



...........or bullets will be flying into heads very soon.


In a country where the Military hates the Commander in Chief and the Commander in chief hates the Military, the current situation is absolutely unsustainable

lotsoffun's picture

you are dreaming, i'm dreaming also.  but  - it's a dream.  will never happen in our lifetimes.


Everybodys All American's picture

This is all about the international markets saying enough. Bond markets close access to countries all the time when countries look like they are out of control. That's really what we're talking about aren't we Jack Lew. International markets have signaled they no longer need or want the dollar. Now then that leaves Treasury and the Fed between a rock and a hard place doesn't it. How about cutting spending idiots. Treasury is now just starting to get it and maybe they can pass the word on to the president. Maybe he can get everyone else to wake up and take some action such as cutting spending dramatically. Yeah that'll happen.

catch edge ghost's picture

I know! They should open 24 hour Treasury Marts in every Walmart and let people buy Notes at a discount with EBT. It's only slightly more of circle-jerk than the one currently in place.

Fix-ItSilly's picture

Why?  with rising rates, and rates that may rise out of control for periods of time, Treasurys may not be preferred over gold, bridges, scrapped aircraft carriers and oil leases.  The latter items are not as easily fungible and quickly sold.

NOTaREALmerican's picture

Isn't this where the trillion dollar coin comes into play?

MassDecep's picture

Time to ramp up the Ebola virus

Atomizer's picture

Keep up with the US Media Jones, Rabbit Fever. When one story goes dead, create a lovable bunny fear. Watch out for the easter bunny airborne egg disease. 

This disease shit is like clock work