It seems the at-risk banks are struggling with long-term bonds and fixed rate mortgages they don't want to sell at a loss because the price of the securities went down when the rates went up. Many of them can't afford to have their customers withdraw all savings because the bank can't afford to sell the long bonds at a loss.
If the Fed buys more long term bonds and sells T-bills and short term maturity bonds, the price of long bonds would go up and the banks can sell them if they need cash. To avoid QE, the Fed could sell more T-bills and short-term bonds. This would cause long term yields to be lower and short term yields to be higher.
The Fed's buying short bonds and T-bills would encourage people to save if T-bills and money market accounts start paying yields of 5 percent or more. Putting money in short-term savings and spending less would help fight inflation. But, would this be a problem for banks if depositors pull their money out of bank accounts and put it in T-bills and short-term bonds?
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