Why Didn't Dimon Step In on Repo? Just Ask Fed
Comment of the Day

October 15 2019

Commentary by Eoin Treacy

Why Didn't Dimon Step In on Repo? Just Ask Fed

This article by Brian Chappatta for Bloomberg may be of interest to subscribers. Here is a section:

There’s no indication that the Fed will consider loosening its requirements on banks to shore up the repo market. Instead, the central bank appears to prefer to do everything itself, abruptly reversing course on the size of its balance sheet and increasing the amount of reserves. St. Louis Fed President James Bullard said on Tuesday that a standing repo facility would be a sensible “endgame” to prevent more bouts of extreme volatility in funding markets.

Eoin Treacy's view

A standing repo facility at the Fed opens its balance sheet to potentially unlimited liability. That is the primary reason it has relied on the banking sector to provide liquidity historically and it is a testament to just how far the Fed is willing to go in deploying extraordinary liquidity measures.   

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