Category Archives: Finding a Fix

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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 round-up: Turmoil in shadow banking

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RepoWatch recommends the following reports. Search for the topics that interest you: Accounting, Collateral, DataWatch, Finding a fix, International repo, Money market funds, Securities lending, Securitization, Shadow banking, and Tri-party repo. Items are arranged chronologically, within topics that are listed alphabetically. … Continue reading

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Part 1: Tri-party repo’s problems are deep and unresolved

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The tri-party repurchase market is more vulnerable to panic and abuse and further from being fixed than has previously been understood, based on recent reports. This matters, because tri-party was the chief trouble spot in the financial markets in 2007 … Continue reading

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Part 2: Are JPM and BoNY the best we can do?

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As the Federal Reserve and clearing banks JP Morgan Chase and Bank of New York Mellon struggle to reform the U.S. tri-party repo market, some students of the system think it might be better to install an independent middleman rather … 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 1: Still no data – What’s taking so long?

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It’s three years after the financial crisis, and we still don’t have the most basic data that we  need in order to be able to spot a gathering storm in the financial markets. Especially needed is more information about shadow … 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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Keep an eye on this quarterly Fed study of repos

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A shortgage of trusted repo collateral is slowing the flow of credit in the U.S. and in Europe, and that trend is showing up in a survey of the repo market now being conducted quarterly by the Federal Reserve. Spotting … 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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WSJ steps up its repo coverage

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With no repo reform on the horizon, the European financial crisis threatens to erupt into a full-blown panic, Wall Street Journal reporter Kelly Evans wrote last week. While this is not news to RepoWatch readers, it’s big news to readers … 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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FT: Volcker rule may exempt repos and securitization

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Repos and securitization, the combination that nearly destroyed the credit markets and the U.S. economy in 2007-2009, will not be prohibited by the Volcker rule, according to the Financial Times. The Volcker rule is intended to limit proprietary trading at … Continue reading

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In brief: The demand side did it

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University of Oregon professor Mark Thoma believes the cause of the financial panic in 2007-2008 is likely to lie with the demand side of the market, more than the supply side. So does International Monetary Fund economist Zoltan Pozsar. So does RepoWatch. … 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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Using taxes, fees or haircuts to reform repo

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Americans don’t hear much debate these days on ways to avoid having to bail out the repurchase market again. That’s a problem, because Congress is not likely to act on an issue the American public is not paying attention to. … 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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Risk may move from credit default swaps to repos

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In the financial crisis of 2007-2008, much of the systemic risk that forced federal regulators to inject trillions of dollars into the financial markets to keep them from collapsing was caused by repos and credit default swaps. Now it appears the … Continue reading

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JPM and BoNY exposed during debt-ceiling crisis

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Editor’s note: It’s a scandal that Bernanke and Geithner handed reform of tri-party repo to  the bankers instead of to Congress and Dodd-Frank and the reform has not been done. Commentary The most vulnerable banks during this U.S. debt-ceiling crisis … 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