On September 13, 2008, JP Morgan pulled $15B of repo financing from Lehman Brothers, forcing the company into bankruptcy. If the Fed’s (new) colossal repo market backstop was available back then, the ill-fated bank would have lived to fight another day.
(1)
(1)
Fed’s Repo Time Line
1. September 2019: Up to $75B overnight Repo up to 14 days.
2. March 2020: Up to $1.5T as long as 84 days.
3. May 2020: Up to $10T for as long as 5 years?
If this facility existed in 1998, Long Term Capital wouldn’t have collapsed.
*Not capitalism.
1. September 2019: Up to $75B overnight Repo up to 14 days.
2. March 2020: Up to $1.5T as long as 84 days.
3. May 2020: Up to $10T for as long as 5 years?
If this facility existed in 1998, Long Term Capital wouldn’t have collapsed.
*Not capitalism.
2020 Investment Forum
Central banks are now picking winners and losers, we can go home now.
Central banks are now picking winners and losers, we can go home now.
