Monthly Archives: August 2011

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Bloomberg details Fed’s three-year bailout frenzy

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Bloomberg News has given us a stunning picture of the frantic efforts by the Federal Reserve to save the credit markets between August 2007 and April 2010. The report doesn’t mention the R-word (repo), even though fear for the repurchase … Continue reading

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Why banks had so much skin in the game

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One of the great surprises of the financial crisis of 2007-2008 was that commercial and investment banks held one-fourth of the mortgage-backed securities they’d supposedly sold to investors. This surprise shot a big hole in the pre-crisis theory that securitization … Continue reading

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If it walks like a bank, it should be regulated like a bank

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Financial institutions that borrow short-term loans and use that money to lend long-term loans – that is, they borrow short and lend long – should be regulated like FDIC-insured banks. That’s the essence of a new paper by Morgan Ricks, a … Continue reading

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Fitch: Shortage of risk-free repo collateral hits prime money market funds

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Prime money market funds, which invest in both corporate and government securities, are increasingly accepting nongovernment securities as collateral for repo loans, according to an August 4 Fitch Ratings survey of the 17 money market funds it rates. The survey did not say what … Continue reading

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Using taxes, fees or haircuts to reform repo

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Americans don’t hear much debate these days on ways to avoid having to bail out the repurchase market again. That’s a problem, because Congress is not likely to act on an issue the American public is not paying attention to. … Continue reading

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Lenders, not borrowers, were the driving force behind the financial crisis

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Editor’s note: RepoWatch would like to recognize Financial Times editor Gillian Tett, whose August 11 column about the Pozsar report proves once again that she is far ahead of other journalists in her understanding of the core issues facing financial … Continue reading

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WSJ: REITS fall on repo fears

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In an otherwise enlightening August 2 story about how repo-dependent Real Estate Investment Trusts fared during the debt ceiling crisis, Wall Street Journal reporter John Jannarone made the following statement: Fortunately, the repo market is unlikely to freeze up entirely. … Continue reading