Who Ran on Repo?

Abstract

The sale and repurchase (repo) market played a central role in the recent financial crisis. From the second quarter of 2007 to the first quarter of 2009, net repo financing provided to US banks and broker-dealers fell by about $900 billion--more than half of its pre-crisis total. Significant details of this “run on repo” remain shrouded because many of the providers of repo finance are lightly regulated or unregulated cash pools. Our analysis highlights the danger of relying exclusively on data from regulated institutions, which would miss the most important parts of the run.