Loading ...According to Reuters, “JPMorgan Chase has become so big that some rival banks and analysts say changes to its $2.7 trillion balance sheet were a factor in a spike last month in the U.S. “repo” market, which is crucial to many borrowers.”
As a reminder, just days after the record repo rate surge, a clearly clueless NY Fed president John Williams told the FT in an interview that the Fed was examining “why banks with excess cash failed to lend to the overnight money market, following a week that revealed cracks in the US’s financial plumbing.”
The answer: big changes JPMorgan made in its balance sheet “played a role in the spike in the repo market.”
Specifically, using public data, and conducting an analysis similar to the one we did last weekend tracking commercial bank cash levels, Reuters found that JPMorgan reduced the cash it has on deposit at the Federal Reserve, from which it might have lent, by $158 billion in the year through June, a 57% decline.