Loading ...Re Repo’s……as part of the problem is regulatory, the G-Sib’s, that could be changed/fixed if a problem occurs…..however that hedge funds are using massive leverage in the Repo mkt, is a worrying fact, as only a small move could wipe them out and set off a cascade of liquidation……and the short term money mkt, is infamous for huge moves, often just round dates, such as year/quarter/month end, due to liquidity constraints only, as books close, so the hedgies are really playing with fire.
Why the Fed is allowing them to is a very good question, as the mkt does not need them and should be just for short term financing. Operating cleanly, the mkt is an excellent indicator of banking health, why distort it, just for some Co’s potential gain.