Re:Statement Regarding Repurchase Operations
by beezle on Friday September 20, 2019 @02:48PM
(#21029964)
This isn't about counterparty issues. That was Lehman in 2008. This is a systemic liquidity shortage.
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Re:Statement Regarding Repurchase Operations
by DebtDeflation on Friday September 20, 2019 @04:40PM
(#21031065)
>This is a systemic liquidity shortage.
That seems to be the consensus, but I'm not convinced. $75B is tiny compared to the amount of excess reserves in the banking system and compared to the size of the overall repo market. Yet the Fed is treating this as an urgent matter. My guess is that there is a single (or a small number) of banks that are having a liquidity problem and the Fed is trying to stop it from becoming a broader issue.
Re:Statement Regarding Repurchase Operations
by beezle on Friday September 20, 2019 @07:34PM
(#21032375)
I think we would have other information (rumors, etc) if there were a large bank in trouble and, AFAIK, most repo is tri-party reducing risks further.
Another reason I feel this is not a single name problem is that the spread of FF to IOER had been rock stead until 2018 when FF began to trend from -15bp to parity/+5bp. So this pressure has been around awhile now.