Category Archives: Economists on repo

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U.S. Regulators: Repo is vital, and it’s dangerous

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In the past three months, U.S. regulators have issued nine warnings about danger in the repo market, a market they repeatedly describe as critical to the worldwide financial system but needing reform. Is anyone listening? The Financial Stability Oversight Council, … Continue reading

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The future looks a lot like the past

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“Regulation of shadow banking is starting to look more and more like regulation of traditional banking 100 to 150 years ago, when it took decades of runs on banks, bank failures and economic agony before  Congress in 1933 finally approved … Continue reading

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NY Fed chief lays it on the line, for bankers and for the rest of us

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It felt like “The Gunfight at the O.K. Corral.” First to appear was departing Treasury Secretary Timothy Geithner, who told Wall Street Journal economics editor David Wessel in a wide-ranging exit interview January 17 that the financial markets are much … Continue reading

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Economists and other analysts see value, danger in repo and shadow banking, urge reform

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Latest update: October 2, 2012 In recent months economists and other experts have published a torrent of reports on repo and shadow banking, noting their importance and their dangers and urging reform. Following are 74 of the reports, arranged chronologically … Continue reading

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Repos are at the heart of the European distress

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As financial markets convulse over the European Union once again, RepoWatch would like to remind its readers that at the heart of the problem lies the repurchase market. Yes, some European countries spent too much money and now are burdened … Continue reading

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Shadow banking, part 3: Some experts call for FDIC-style safety net for shadow banking

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The financial crisis showed that the safety net for traditional banks can work. Although 436 banks failed from January 2008 through April 2012 – some large, like Washington Mutual, but none the size of Lehman Brothers – the FDIC handled … Continue reading

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Shadow banking, part 2: Lack of shadow master plan means impact of new rules is uncertain

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The shape of shadow banking reform is now clear. Congress and regulators are going to put a bunch of new rules in place, but they’re not going to articulate a coherent vision of what shadow banking should, or should not, … Continue reading

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Shadow banking, part 1: Failure to reform shadows hurts economy, endangers financial markets

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Updated June 18, 2012 One of the failures of the Dodd-Frank Act was in not restructuring shadow banking, with a sturdy repo market at its heart, so it could safely gear back up to boost credit and help the economy … Continue reading

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News round-up: Repo and shadow banking A to Z

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RepoWatch recommends the following reports. Search for the topics that interest you: DataWatch, Financial crisis, Finding a fix, Hedge funds, Regulation, Repurchase market, Securities lending, Securitization, Shadow banking, Too big to fail, and Tri-party repo. Items are arranged chronologically, within … Continue reading

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News roundup: Repo and shadow banking in the crosshairs

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Repo and shadow banking have been getting a lot of attention lately. It’s rewarding that an understanding of their importance is spreading. RepoWatch recommends the following reports, arranged within topics that are listed alphabetically: Financial crisis “Getting up to speed … Continue reading

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Part 2: Here’s the data regulators need to collect on repo

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To spot the build-up of systemic risk in the financial markets, regulators need to collect six bits of information about every repo and securities lending transaction, according to a report from four economists at the Federal Reserve Bank of New … Continue reading

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Top dealers to Fed: Flow of credit continues to slow

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Credit in key areas of the repurchase market continued to tighten in the fourth quarter, according to the Federal Reserve’s quarterly survey of senior credit managers at 20 leading Wall Street dealers. The finding furthers a trend that the Fed reseachers … Continue reading

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The media buzz about rehypothecation

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Updated July 30, 2013 Rehypothecation may be the news hook that finally gets the U.S. business press to start covering the repurchase market. Ever since the broker-dealer MF Global filed bankruptcy October 31, and word escaped that $1.2 billion of … Continue reading

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To understand the financial crisis, read this book

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Book Review If you only read one book about the financial crisis, read “The Fall of the House of Credit” by Alistair Milne, a professor of financial economics at Loughborough University in Leicestershire, UK, north of London. This book, which … Continue reading

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Leading crisis experts are trying to get our attention

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When three of the economists most knowledgeable about the financial crisis of 2007-2008 start jumping up and down, waving their arms and shouting “fire!” … maybe we should listen? That’s happening now. Three prominent economists are calling for a solution to … Continue reading

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Regulators talk tough about tri-party reform

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If the industry task force working to make the tri-party repurchase market more stable in a crisis won’t do the job, regulators may have to do it for them. That tough warning comes from William Dudley, president of the Federal … 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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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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Economists: Repos underlie financial crisis in Europe

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The financial crisis in Europe grows out of banks’ excessive use of repos and their assumption that government officials will not let the repurchase market fail, according to a July 2011 report by two economists. In “Europe on the Brink,” economists Peter Boone and Simon … Continue reading

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Fear in today’s markets shows failure of Dodd-Frank

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If the financial crisis in 2007-2008 was fundamentally about mortgages, as many believe, why are we facing a similar financial crisis today? Here’s the answer: The fundamental problem three years ago was not mortgages. It was the repurchase market and credit default swaps. … Continue reading