Category Archives: Economists on repo

Gallery

Top dealers to Fed: Flow of credit continues to slow

This gallery contains 1 photos.

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

Gallery

The media buzz about rehypothecation

This gallery contains 1 photos.

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

Gallery

To understand the financial crisis, read this book

This gallery contains 1 photos.

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

Gallery

Leading crisis experts are trying to get our attention

This gallery contains 1 photos.

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

Gallery

Regulators talk tough about tri-party reform

This gallery contains 1 photos.

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

Gallery

If it walks like a bank, it should be regulated like a bank

This gallery contains 1 photos.

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

Gallery

Lenders, not borrowers, were the driving force behind the financial crisis

This gallery contains 1 photos.

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

Gallery

Economists: Repos underlie financial crisis in Europe

This gallery contains 1 photos.

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

Gallery

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

This gallery contains 1 photos.

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

Gallery

NY Fed economist buries the bad news about tri-party repo reform

This gallery contains 1 photos.

Commentary From the editor: To those of you who read the latest from the New York Fed’s Liberty Street economists, Stabilizing the Tri-Party Repo Market by Eliminating the ‘Unwind,’ I hope you read to the end of the piece. At … Continue reading

Gallery

Financial reforms have not fixed the problems

This gallery contains 1 photos.

The recent financial reforms are focused on making commercial and investment banks stronger, but they ignore the real problem in the financial crisis of 2007 and 2008, which was runs on the shadow banking system, banker Michael Pomerleano wrote in the Financial Times’ … Continue reading

Gallery

Repos and money market funds may need a public safety net

This gallery contains 1 photos.

If future credit needs will be met in part by shadow banking, as they were prior to the financial crisis, then we may need to bring repurchase agreements and money market funds, which provide much of the funding for the … Continue reading

Gallery

Banks’ over-reliance on overnight repo is “absurd”

This gallery contains 1 photos.

Enrico Perotti, professor of international finance at the Amsterdam Business School, wants to tax banks that repo, to discourage “the current absurd over reliance on overnight repo markets.” He is highlighting the following papers on his web site. From The Governance … Continue reading

Gallery

London conference: More calls to fix bankruptcy exemption for mortgage-backed repos

This gallery contains 1 photos.

The special bankruptcy treatment extended to repurchase agreements in 2005 played a critical role in the financial crisis of 2007-2008, and changes must be made, experts cautioned at a financial conference in London June 1.   The warnings came just … Continue reading

Gallery

Hoenig says nix the bankruptcy exemption for mortgage-backed repo

This gallery contains 1 photos.

Thomas M. Hoenig, the president of the Federal Reserve Bank of Kansas City, says in a May report that the special bankruptcy treatment extended to mortgage-backed repos in 2005 must be reversed to prevent future financial crises. In 2005 Congress said repo lenders … Continue reading

Gallery

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

This gallery contains 1 photos.

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

Gallery

Why couldn’t experts see the coming financial crisis in their data?

This gallery contains 1 photos.

In the years leading up to the financial blowout in 2008, the two most important sets of missing data that could have helped experts spot looming trouble were measurements of (1) mortgage quality and (2) repo volumes and collateral quality, … Continue reading

Gallery

Tri-party repo reform seen as helpful but will not avert 2008-style panic

This gallery contains 1 photos.

JP Morgan Chase and Bank of New York Mellon are making good progress in protecting themselves from the tri-party repo risk that threatened their survival in 2008, but little progress is being made in protecting taxpayers who may have to pick … Continue reading

Gallery

Kling doubts repo can be completely fixed, puts focus on interest-rate risk

This gallery contains 1 photos.

Arnold Kling Since the next financial crisis is not likely to mimic the last one, how might RepoWatchers use their understanding of shadow finance to spot the next trouble area? Economist Arnold Kling, a scholar at the Mercatus Center at … Continue reading

Gallery

Experts issue studies on repurchase market and systemic risk

This gallery contains 1 photos.

To RepoWatch readers: Some important work related to repos and systemic risk has been pouring out from economists and regulators in the past few days. I’ll be writing about each, trying to highlight the key points in simple language, but … Continue reading