Whom do the underwriters sell the bonds to?

To institutional investors. In this case, the banks themselves. The Federal Reserve. If an underwriter has a project that no one wants to buy and that everyone figures is a failure, that bond’s value is going to erode. There’s a danger that it’s going to default, and institutions just stay away. They don’t buy. Also, if the premium on the money isn’t enough, they don’t buy. They leave it alone. As a bank, you can buy as much as you want, or as little as you want. The Federal Reserve can buy it all and call it reserves.