Excerpt from Crain’s NY Business quoting DataTrek’s Nick Colas:
…. “First, the report demonstrates the repo crisis was more “systemic” than Fed officials believed, said DataTrek Research co-founder Nick Colas said in a client report Tuesday, or more threatening to the stability of the financial system than they understood.
The report suggests that US banks have lost some of their institutional knowledge and operational ability to fund the repo market. BIS nicely explained how panicked the market got, observing global banks stepped away “despite attractive profit opportunities.” Mercy!
Most alarming, the repo report wasn’t issued by the Fed’s own staff, but by the BIS.
“The fact that [BIS]…unearthed new and useful facts is troublesome,” Colas said. “Even if the Fed was able to patch the problem by supplying liquidity, we’re still left wondering what else the central bank either doesn’t know or is not revealing”….
Read the full article here in Crain’s NY!