Last month the Securities Industry and Financial Markets Association, better known as SIFMA, published its US Repo Market Fact Sheet, 2015.
This fact sheet contains the following paragraph:
Safety of the repo market: The repo market has been tested over the years and during the recent credit crisis, and performed reliably. Repos offer cash providers collateralization (with additional margin requirements in most cases) and that collateral is marked-to-market daily to ensure continuing protection. The operational efficiencies developed through tri-party repo and the largely-centralized settlement mechanism for repos further minimizes risks. In addition, recent reforms in the tri-party repo market have further enhanced the resiliency of this market. Market standard documentation, broadly accepted in the market, provides further certainty for market participants.
Let’s just call this what it is: patent nonsense.
Anyone reading RepoWatch knows that the repurchase market was the financial crisis in 2008. After experts’ full-throttle warnings last year, it’s deeply troubling that an association many people depend upon for reliable statistics and analysis could publish this paragraph with a straight face.
On July 23, I emailed the following question to SIFMA’s media contacts Katrina Cavalli, Liz Pierce and Carol Danko.
Question: How do you respond to the reports from regulators – for example, here – that the repurchase market was central to the financial crisis in 2008, and why do you not mention the important steps the Fed took to keep the market from freezing?
Hearing nothing, I resent the email on August 5.
I am still waiting for a reply, and if it comes I will post it here.