Category Archives: Never say r-word (repo)

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Bernanke discusses clearinghouses but not tri-party repo

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Federal Reserve Chairman Ben Bernanke gave an important speech about systemic risk and the “plumbing” of the financial system April 4 and never mentioned the repurchase market. He especially talked about clearinghouses and clearing systems and their importance in managing … Continue reading

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Systemic risk apparently not a priority for regulators, reporters

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Almost three years after the financial crisis, regulators are still trying to find ways to deal with systemic risk, according to two top regulators who spoke at the annual conference of the Society of American Business Editors and Writers in … Continue reading

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Fed releases names of tri-party repo borrowers at height of crisis

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Bloomberg and Fox News began reporting March 31 the names of the financial institutions that got emergency repurchase loans from the Federal Reserve during the financial crisis. The names became public when the Fed released to the two news groups the reports … Continue reading

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Covered bonds could be the next U.S. repo collateral

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Covered bonds appear to be a candidate to replace asset-backed securities and asset-backed commercial paper as collateral for repo loans on the U.S. repurchase market, because they may be more acceptable to post-crisis investors. But covered bonds will not prevent … Continue reading

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Do repo and other risks still threaten the world economy?

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As regulators try to force commercial and investment banks to have more equity and less debt, by raising their capital requirements, the banks continue to find ways to evade the rules as they did leading up to the financial crisis … Continue reading

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FDIC to charge higher premiums for repo use

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On April 1 banks will have to start paying Federal Deposit Insurance Corp. premiums on all types of debt including repurchase agreements, not just on domestic deposits. The switch “will be seismic at the nation’s largest banks, which in some … Continue reading

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Study on crisis leverage barely mentions repos

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Most of the leverage in the shadow banking system comes from repurchase transactions, but a new study of the build-up of bank leverage 2000-2009 barely mentions it because of the difficulty of getting repo data. The study shows that commercial … Continue reading

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SEC files civil fraud charges against Colonial Bank exec

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The former operations chief at the failed Colonial Bank “enabled the (repo) sale of fictitious and impaired mortgage loans and securities” to Colonial Bank by its largest warehouse borrower, Taylor, Bean & Whitaker Mortgage Corp., according to a National Mortgage … Continue reading

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Taylor, Bean president pleads guilty to repo fraud

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The former president of Taylor, Bean and Whitaker Mortgage Corp. has pleaded guilty to bank fraud in a $1.9 billion repo conspiracy that contributed to the collapse in 2009 of Colonial Bank, based in Montgomery, Alabama. Raymond Bowman of Atlanta … Continue reading

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FSOC studies data needed to spot systemic risk

Bloomberg has obtained a copy of a confidential Feb. 3 study by the Financial Stability Oversight Council that discusses data the council needs in order to be able to determine when a financial institution poses systemic risk to the financial … Continue reading

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Asian crisis of 1997-98 similar to 2007-08

The Asian financial crisis of 1997-98 was similar to the crisis of 2007-08, and the fixes proposed a decade ago sound familiar, but they did not prevent the later panic because the developed world saw itself as more sophisticated and … Continue reading

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Did Citigroup improperly value repo collateral?

Revelations today by Bloomberg columnist Jonathan Weil raise important questions about operations in the repurchase market during the financial crisis of 2007 and 2008. Weil reports that Citigroup Inc. executives knew in February 2008 that the giant bank’s internal controls … Continue reading

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Obama housing options silent on repos

The Obama Administration’s proposals to fix housing finance do not mention the repurchase market, would not improve its stability and could make it worse. The proposals, released Thursday, call for completely phasing out Fannie Mae and Freddie Mac and offer … Continue reading

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Securitized banking vs. FDIC-insured banking

Discover Financial Services, a Chicago-based bank and credit card company, will buy about $1.1 billion in deposits from Allstate Corp., which is getting out of the banking business, Bloomberg News reported Tuesday. Discover has been “trying to reduce their reliance … Continue reading

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Quality of securitizations questioned

The quality of commercial mortgages being packaged into bonds is declining as sales in that market soar, according to a Standard & Poor’s analyst quoted in a Bloomberg News report Monday. “There’s some crap getting done,” David Jacob, an executive managing … Continue reading

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J.P. Morgan to accept gold as repo collateral

J.P. Morgan Chase will accept physical gold as collateral for tri-party repurchase transactions, the banking giant said Monday. It will also let traders use gold as collateral in securities lending transactions. Bonds and stocks have traditionally been the collateral used … Continue reading

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FASB proposal to report more repo detail

Reporting on repurchase agreements could get more accurate under a proposal from U.S. and European accounting boards that would require more detailed disclosure. Currently U.S. companies can net repo borrowing with repo lending and report only the difference, when the … Continue reading

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NYFed adds more money market funds as repo partners

The Federal Reserve Bank of New York today released the names of 32 more money market funds that have been approved to buy securities from the New York Fed, if and when the Federal Open Market Committee decides to start … Continue reading

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Mega-banks regain control of bond trading

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The giant Wall Street banks are tightening their control of the profitable bond trading market, Bloomberg reported January 20. The boutique bond trading firms that sprang up when the financial crisis weakened the mega-banks are losing ground to the giants, … Continue reading

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Repo’s role in Citigroup’s 2008 implosion

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In this January 2011 accounting of the Citigroup implosion in late 2008 by the Office of the Special Inspector General of the Troubled Asset Relief Program (SIGTARP), authors stress that the too-big-to-fail problem is still with us. They also write … Continue reading