Monthly Archives: May 2010


How do you give a bank a haircut?

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How does a run on the repurchase market work? The answer is: Haircuts. In a repo loan, the borrower must secure the loan with collateral. How much collateral? That’s set by the lender. Let’s say the lender wants $100 million … Continue reading


Geithner says regulators can tame repo

Treasury Secretary Timothy F. Geithner told the Financial Crisis Inquiry Commission today that the financial crisis of 2007 and 2008 was the result of a poorly regulated parallel banking system that was “particularly vulnerable to a classic run or banking … Continue reading


Paulson testifies about the 2008 run on repo

 In testimony before the Financial Crisis Inquiry Commission May 6, former Treasury Secretary Henry M. Paulson, Jr. discussed four areas of the financial system “where flaws were exposed by the recent crisis”: securitization, repurchase agreements, commercial paper, and money market … Continue reading


Bear Stearns’ executive talks about repo

Following is the transcript of testimony by Paul Friedman, senior managing director of Bear Stearns, before the Financial Crisis Inquiry Commission on May 5, 2010. The commission had asked him to discuss Bear Stearns’ use of the commercial paper and … Continue reading


Congress not addressing repos, Fannie, Freddie

Some experts are cautioning The New York Times that financial crisis legislation being developed in Congress may not make important changes needed – mainly to fix the repurchase market, Fannie Mae and Freddie Mac – and, if so, will not … Continue reading