Digging In to Tri-Party Repos

Last week I wrote about how banks interact with the Federal Reserve, and that elicited some queries about tri-party repurchase agreements. It's a worthy subject, so I'll address it briefly here.

The relationships I discussed pertain to basic two-party repurchase agreements. In these, a bank will either lend to or borrow reserves from the Federal Reserve, with existing high-quality debt assets as collateral, and receive or pay interest during the holding period. These are very paperwork-intensive transactions, because they require actual ownership transfers of the underlying collateral....555 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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