Category Archives: History

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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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How journalists can learn from the 2008 financial crisis

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This post is a transcript of  an 11-minute talk RepoWatch editor Mary Fricker gave to college journalism professors, students and others at the 11th Annual Convergence and Society Conference, Advancing Business Journalism and Convergence, at the University of South Carolina School … 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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The repurchase market has become Too Big To Fail

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Commentary From the editor: Have the U.S. and Europe reached the point where borrowers can not be allowed to default on their debt, and their lenders or investors can’t be forced to eat any losses, if financial institutions are widely using the debt as collateral … Continue reading

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Fed scholars: A run on the repurchase market caused the financial crisis and will probably happen again

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The financial crisis of 2007-2008 was primarily a run on the repurchase market, when lenders refused to role over their repo loans to large investment banks. This was like bank runs decades ago, when depositors rushed to take their money out … Continue reading

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U.S. debt default could freeze repo market

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Geithner Last updated June 26, 2012 When Treasury Secretary Tim Geithner says a U.S. default on its debt “would inflict catastrophic, far-reaching damage on our Nation’s economy,” one of his key worries is the repurchase market. That’s because if repo … Continue reading

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Black: Why CEOs haven’t been busted

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“Unless you imprison the fraudsters, sophisticated financial scams grow ever more destructive. It seems as if we have forgotten this lesson,” writes William K. Black for Bloomberg News May 10 in an article headlined “Why CEOs avoided getting busted in … Continue reading

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Will ‘ring-fencing’ work better than ‘firewalls’ did?

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We’re hearing a lot about “ring-fencing” these days. That sounds suspiciously like “firewalls” to some of us who covered the S&L calamity 20 years ago. Sheila Bair, chairman of the Federal Deposit Insurance Corp., thinks bank holding companies should ring-fence their investment banking operations … Continue reading

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Economists offer ways to measure and monitor systemic risk

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Economists have produced several studies showing ways the new Office of Financial Research and other experts might measure systemic risk and identifying useful data to spot rising risk. The important point is that regulators were not collecting needed data before the financial criis of 2007-2008, … Continue reading

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Repo-bits: Quick peeks at repo’s role in the crisis

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The repo market lies hidden under so much of what happened in the financial crisis in 2007 and 2008. Only now and then does the public get a glimpse of repo’s role. Consider these isolated repo-bits: (1) “(John) Merriwether, who … Continue reading

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NYU: Most of the leverage was in repos

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“Repo financing was the basis of most of the leveraged positions of the shadow banks.” From RepoWatch’s view, that’s the key sentence in “Regulating Wall Street,” a November 2010 book authored by New York University Stern School of Business professors Viral … Continue reading

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Commentary: Repos must be reformed

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The repurchase market must be reformed, say two New York University professors and leading analysts of the financial crisis of 2007-2008. “Although one of the main concerns of the Dodd-Frank Wall Street Reform and Consumer Protection Act soon to be signed by … Continue reading

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Lessons from the financial panic of 1890

A University of California professor finds that the financial panic of 1890, involving the Argentine banks and the House of Baring, a British investment bank that held large amounts of Argentine debt, was nearly identical to the financial crisis of … Continue reading

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Little progress on rules to help banks survive a panic

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Regulators are not yet setting rules on how much ready cash or cash-like assets a bank has to have, which seems strange since the financial crisis of 2007-2008 featured banks that became insolvent because their securities were losing value and … Continue reading

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Repo market got a facelift in the 1980s

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Repurchase agreements navigated several crises in the 1980s to become the critical player in the financial markets that they are today. That history is reviewed by New York Fed vice president Kenneth D. Garbade in a May 2006 report. From … Continue reading

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What did regulators know and when did they know it?

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If anyone wants proof that regulators understood the risks facing the financial markets prior to 2007, here it is: “Hedge funds, leverage, and the lessons of Long-Term Capital Management,” report of The President’s Working Group on Financial Markets, April 1999. … Continue reading

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Repo goes from boring to hip

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Back in February 1997 repos were going “global and hip,” according to DerivativesStrategy.com, an online publication that covered the derivatives market from 1992 to 2001. Bloomberg screens had started carrying repo prices, repo markets were opening around the world, and … Continue reading

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Repos were hot … back in 1979

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Think repos are new? Check out this September 1979 article from the Federal Reserve Bank in St. Louis by Norman N. Bowsher. Even then, repos were popular. From the report: The market for repos has increased dramatically in the past … Continue reading