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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Son of Captain Nemo's picture

Readng between the lines....

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

See (Appendix C) of the Considerations for Developing Optimal Treasury Cash Balances that discuss ways to maintain that higher level of cash balances through subterfuge, total annihilation and pillaging of other sovereign government(s) using military backed juntas and terrorists trained by the U.S. Government.

Appendix D of the Considerations for Developing Optimal Treasury Cash Balances will discuss the options of bail-ins that have worked so well as a test case in places like Greece and Crete and how they can be systematically invoked on U.S. taxpayers when necessary.

Appendix E of the Considerations for Developing Optimal Treasury Cash Balances written by ex-Secretary of the Treasury Paulson delves into the strategies for confiscation of accounts through Martial Lae when lawmakers and their constituents become "reluctant"...


seek's picture

This shortfall increases to [...] $239 billion if market access had been lost for 10 days.

That's some interesting math. Total US budget is something like $3.5T, 250 working days a year, ~14B per day, or $140B in 10 days. Where's the extra $100B coming from?


Impoverished Psychologist's picture

It is clear that the ability of the system to maintain supplies of cash in the case of some kind of systemic event is insufficient.

If things go bad it is evident that they cannot keep the lights on for long.

optimator's picture

A lot of that money wasn't even printed by the fed.  Wired to primary dealers and wired into the markets.  when it comes out and stops being wired?

agstacks's picture

Obama's tips:

“Spending discipline is important.”

"Beware of debt"

“Save a little bit out of whatever you earn, and the magic of compounding interest applies.”

This really isn't so hard, not sure why the government doesn't follow our President's own great suggestions. 


Fix It Again Timmy's picture

Last time I looked out the window, tractor-trailer loads of cash were being handed out in Baghdad...War' did go, bubba?...

q99x2's picture

Yellen, you get your mug on the horn and have Brussels rustle up a bundle. Washington needs more fiat.

esum's picture

who is kidding who.... what "function" does the fed play other than taking a vig (pure no risk profit) for WHAT?

not a fucking thing.

THE USSA CAN BYPASS THE FED AND PRINT ITS OWN USA MONEY.... of course persidents that tried to do that were ASSASSINATED...ABE AND JFK....( i think they tried on Jackson).. and foreign leaders were overthrown... (watch out Putin, the FOLKS/(ussa agents) in St Petersburg are itchy... 

what brand of toilet paper do you use.... Fed or Treasury.... as has become a popular phrase .... WHAT DIFFERENCE DOES IT MAKE???... only one the fed banksters dont get their risk free profit.. the rest is BULLSHIT

stand by for CONFISCATORY tax increases..... 

Dewey Cheatum Howe's picture

 The topic: the US Treasury suddenly losing access to capital markets.


Maybe I am missing something here but couldn't the Treasury at any time just bypass the FED and issue it's own currency if it has a capital crunch? Well that would be assuming they actually have actual real collateral they could pledge to back the currency issuance with. Full faith and credit ain't going to cut it at this point with the rest of the world.  You know like silver a recognized monetary metal which there is plenty of in the world to do so with, without causing any problems concerning reserves aka gold at the central banks.


JimS's picture

DCH, you hit the nail on the head. Read "The Lost Science Of Money" by Stephen A Zarlenga, and it is an "epiphany" in regards to "money". Whomever has ability to define, create, and regulate any "money", will corrupt that system to their direct benefit. Always. That's the "Third Party Control" thingy with any civilized money system in the last 2500 years. In our current situation it is the bankers and their allies. In the past it has been religious High Priests and exalted Monarchs. Always the constant "cut".

Everybodys All American's picture

No. There is law prohibiting such currency printing by Treasury. But hey what does a law mean to this administration.

Dewey Cheatum Howe's picture

Legal and lawful are not the same thing. There is a thing called a Constitution still in effect. Of course no one is going to challenge the law let alone the Treasury if they are controlled by interests that would be threatened if the Treasury actually did issue it's own money via the US government which is who they are an extension of.


Atticus Finch's picture

Excuse me. The law was written by the owners of the Federal Reserve.

Dickweed Wang's picture

. . . . but couldn't the Treasury at any time just bypass the FED and issue it's own currency . . .

The two presidents to do this were Lincoln (greenbacks) and Kennedy (silver certificates).  Look what the City of London (Lincoln) and Zionists (Kennedy) did to both of them. Both were shot in the head - which holds much symbolism with the murdering bastards.

Dewey Cheatum Howe's picture

I hate to burst your bubble on Kennedy as much as I dislike the FED he wasn't murdered over silver certificates and that executive order.

They didn't have enough certificates in circulation to cover the silver the Treasury had on hand at the time. All that executive order did was allow for the Treasury to issue more certificates and flexibility to assign the denominations for the excess silver they would have still had on hand after existing outstanding certificates were cashed in. It didn't authorize the Treasury to buy more silver.

Kennedy most certainly was killed as form of ritual sacrifice but it wasn't because of silver certificates and executive orders.

Atticus Finch's picture

Actually, that is exactly what John F. Kennedy did and these are referred to a Kennedy notes with a red stamp. Interest free money directly from the US Treasury. Possible at any moment over the last 100 years, except for the assassination part.

p00k1e's picture

Close your accounts associated with the FED (all of them) today and pay off house in your family.

6th century BC Proverbs of Ahiqar: 'a sparrow in thy hand is better than a thousand sparrows flying'.

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.  


Bithead1's picture

Why is it that ancient Rome could collapse WITHOUT all the damn charts.  Why must we need charts now in order to collapse?


Duffy's picture

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


It would be cost effective and prudent for Treasury to start printing its own debt-free currency.  It would also be prudent to look into who is staffing the Terrorism and Financial Intelligence unit within Treasury.

It's simply par for the course, and I am past caring, that the Secretary, Deputy Secretary, and all 3 of the undersecretaries of the treasury (the .gov page notes that Lael Brainard's old slot is still vacant, as she moved over to the Fed) are Jewish...

Terrorism and Financial Intelligence, apart from its Zionist Jewish undersecretary, David S. Cohen - the two assistant undersecretaries are Jews, as is the head of the important and powerful office of foreign assets control. 


Why important?  Because notwithstanding the old chestnut that the question of Zionist Jewish loyalty is always just a "canard" - one is entitled to expect that these people may be working for Israel as much or more than the US.

Stan Fischer being nominated for #2 at the Fed, apart from being amazing on its face, was simply more of an effort by International Zionism to get more and more of the American state under the direct control of Zionist Jews.




p.s. Aint' it funny how Snowden is all over the news right up until he mentions Israel?



p.p.s. Barbara Boxer is a cunt, and an Israeli agent.  So is Feinstein - who is trying to get all sigint data from other intelligence agencies to be passed as a matter of course to NSA precisely to make sure Israel gets it.





p00k1e's picture

Bill HR 4009



Shown Here:
Introduced in House (02/06/2014)

Protect Academic Freedom Act - Amends the Higher Education Act of 1965 (HEA) to prohibit institutions of higher education (IHEs) from being eligible to receive any form of financial assistance under such Act if the Secretary of Education determines that they are participating in a boycott of Israeli academic institutions or scholars.

Directs the Secretary, no later than May 1 of each year, to: (1) identify and make publicly available a list of all IHEs participating in such boycott, and (2) notify each IHE that is so identified of its designation as a participant in such boycott.

Gives IHEs 30 days after their identification as a boycott participant to request the Secretary to waive their ineligibility for financial assistance under the HEA.

Makes the funding prohibition inapplicable to funds available for student financial aid.

Dickweed Wang's picture

Whoever sponsored this bill should be taken out and horse-whipped along with anyone who votes in favor of it.  Just another example of how the government of the USA has been hi-jacked by the Zionist cabal.  WAKE UP PEOPLE!!!!!

Dickweed Wang's picture

Let's look at the numbers here;  Jews comprise about 2% of the population of the USA yet they hold 90% of the top positions in the US Treasury and about the same in the financial, media and multi-national corporate management in the USA?  WHEN ARE PEOPLE IN THE USA GOING TO WAKE UP???? No-one would stand for this if we were talking about Muslims, Chinese or Russians holding these same positions.

daveO's picture

Currently 33% of the Supreme Court. Who knows the percentage of all Federal judges?

Catullus's picture

Uh... What is the concern? That someone doesn't get paid for a week? It's not like ISDA is going to declare the UST in default.

They're suggesting to hold on to more statutory cash because they need to create more treasuries for high quality collateral. So... Borrow more than you need to.

buzzsaw99's picture

This may be what TBAC tells the world they are concerned about but privately they are wringing their hands waiting for the first failed bond auction with the fed tapering and all the geopolitical crap.

Atomizer's picture

NY Fed staffers need to cook up Roman Noodles death meal [sic]

How to make Ramen noodles from scratch: alkaline noodles recipe

Bow Tie's picture

are you ready for the big print?

williambanzai7's picture

Have some ebola with your cesium crackers...

highwaytoserfdom's picture

$331 billion hmm  that seems to be about the size of quarterly window dressing of BTFD  on ZIRP  thefts by forced IRA 401k middlemen.


optimator's picture

Worried about the Gov/Fed taking your 401K money.  They may already have it. This is from the GE 401K money market fund for those that wish to keep their money out of the markets.

"Effective July 15,2014, the Money Market Fund will be renamed the RSP Government Money Market Fund.  This change is being made to formalize the fund's move from a prime money market fund to a government money market fund.  It also reflects the change in the fund's principal investment strategies from investing substantially all of its assets in short-term U.S dollar-denominated money market instruments and other debtr securitiies to investing at least 80% of its net assets under normal circumstances in short-term, U.S. Government securities."

hedgiex's picture

In short the capture of remaining savings and pensions to provide liquidity to support the spectrum of market risks. Ask who are at the frontiers with derivatives (toxics)..the TBTFs and they need the liquidity support.

Interest on this capture will be determined by the Fed. Ask whether the interest will pace with real inflation (not the massaged inflation number).