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WSJ steps up its repo coverage

With no repo reform on the horizon, the European financial crisis threatens to erupt into a full-blown panic, Wall Street Journal reporter Kelly Evans wrote last week.

While this is not news to RepoWatch readers, it’s big news to readers of the Wall Street Journal, which rarely reports on the repurchase market, the role that it played in the financial crisis of 2007-2008, or the danger that it still poses for world financial markets.

RepoWatch has frequently criticized US reporters and editors for ignoring repo, the most dangerous element of the financial crisis. Now congratulations are in order.

Evans’s December 5 story, “Bank-run risk in the shadows,” is a masterful round-up of repo issues, a quick primer that has the heft to start a long-delayed conversation in this country on what to do about repo.

It follows a ground-breaking September 26 Wall Street Journal story by Min Zeng about delays in tri-party repo reform. These two stories lead RepoWatch to hope that the odd US press silence on the desperate need for repo reform is breaking.

Needed next are WSJ stories on page A1 and repo coverage by The New York Times, the Associated Press, Bloomberg, the Washington Post, NPR’s Planet Money and ProPublica. When experienced business reporters at these publications begin to cover the repurchase market, they will help Congress and regulators better understand the issues, and reform becomes possible.

Evans writes that repo, and other elements of shadow banking, need to be protected from runs.

Gradually, regulators may be starting to grasp this. Given the speed that Europe’s debt crisis is unfolding, however, any measures that could help fend off future shadow-banking panics risk coming too late.

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