Monthly Archives: July 2011

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JP Morgan: Repos will transmit the shockwave of a U.S. default

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Money market funds, repos and foreign investors will transmit the shockwave of a U.S. default throughout the economy and the government, according to a JP Morgan report. The authors of the report said they think a default is highly unlikely. But if … Continue reading

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Fitch: Repo could be ‘serious’ threat to money market funds if U.S. defaults

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If the U.S. defaults on its debt payments, a key danger to U.S. money market funds lies on the repurchase market, Fitch Ratings said in a special report July 18. Fitch said it continues to believe an agreement will be reached … Continue reading

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FT: A U.S. default could threaten world’s ‘plumbing system’

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Finally we have a news story from the mainstream business press that explains the potential dangers of a U.S. default. Congratulations to the Financial Times for its consistent, clear reporting on the repurchase market and for not being afraid to … Continue reading

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Doubt cast on key tri-party repo reform

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Three years after the financial crisis, Wall Street banks still have not fixed one of the most dangerous flaws in the markets, and they said July 6 they will not be able to meet an October 2011 deadline for reform … Continue reading

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Press reports unclear on dangers of Greek default

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Last updated June 26, 2012 Commentary From the editor: The main reason world finance officials want to prevent Greece from defaulting on its debt is the same reason U.S. officials bailed out the investment banks in 2008:  To prevent a … Continue reading

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Proposal: Central clearing for repos

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Central clearing for repurchase transactions could prevent the kind of runs on the repo market that triggered the financial crisis in 2007-2008,  writes Jeff Penney, senior advisor to McKinsey & Company, managing member of financial services consulting firm High Line Advisors, and … Continue reading

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UK regulators warn of dangers in repo mutations

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Repurchase transactions are morphing into riskier forms of collateralized lending, the Bank of England warned in its June 2011 Financial Stability Report. With interest rates continuing at record lows, financial institutions and other investors are looking for ways to juice … Continue reading