optiontraderkyle

optiontraderkyle t1_je3n65b wrote

it’s the accounting rules that they have to recognise a loss for hold-to-mature treasuries.

If the bank does not sell its HTM treasuries and holds them until maturity, then the accounting principles for HTM securities generally do not cause any trouble for the bank. The bank will continue to earn interest on the securities and will record the interest income on its income statement.

However, since interest rates rise, the value of the HTM securities may decline in the market, but the bank will not have to record this decline in value on its balance sheet as long as it continues to hold the securities until maturity. This is because, under HTM accounting, the securities are not marked-to-market and are instead recorded at their amortized cost.

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