Category Archives: Money market funds

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If there’s an EU credit panic, repos could transmit it to U.S. banks

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Money market funds, interbank lending and the repurchase market would likely be the key sources of contagion for U.S. banks if Europe’s debt problems panic the credit markets, according to a July 21 article by Jeff Horwitz at the American … Continue reading

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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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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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Repos and money market funds may need a public safety net

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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

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Money market funds, top repo lenders, may need more reform

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 Three years after the financial crisis, officials are still trying to figure out how to fix money market funds. The Securities and Exchange Commission conducted a round table in Washington, D.C., on “Money Market Funds and Systemic Risk” May 10, to see … Continue reading

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Repo returns plummet for money market funds

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Money market funds are the latest victims of the new FDIC fee on repo transactions and other bank debt, according to the Financial Times April 11. Financial institutions have cut back on their borowings on the repurchase market because the … Continue reading

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Bloomberg: New PIMCO fund will not be a repo lender

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In the new version of his Pimco Total Return Fund, fixed-income mutual fund giant Bill Gross will no longer be a repo lender, according to a Bloomberg News story March 10. The new fund, Pimco Total Return Fund IV, is … Continue reading

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Fed lowers MMF size for reverse repos

The Financial Times noted today that the Federal Reserve Bank of New York has dropped its size requirements for money market funds that it will do reverse repos with to $5 billion, down from $10 billion. It also reduced minimum … Continue reading

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Why did financial institutions believe the AAA ratings?

Yves Smith, author of “Econned” and the Naked Capitalism blog, offered this explanation this morning when she was asked why financial institutions “blithely accepted the AAA ratings or otherwise took the word of the ratings agencies and the demand of the … 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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Fitch: Money market funds increase repo lending

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U.S. money market funds are increasing their investment in repurchase agreements, and that’s a trend unlikely to change anytime soon, according to a October 4 report by Fitch Ratings, the credit rating service. Repo activities by U.S. prime money market funds … Continue reading

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WSJ: Money market funds accepting riskier repo collateral

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Some money market mutual funds, which since the financial crisis have made repo loans mainly collateralized by government securities, have begun accepting corporate debt and stocks as security, reports the Wall Street Journal September 16. This move to riskier collateral … Continue reading