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Repo Ructions And The CLO Boom: Where’s The Toxic Waste The Fed’s Bailing Out?

Summary:
In the meantime, with a little imagination, today’s problems in the repo market could be a warning that CLOs are turning to toxic waste, and, as a result, are developing into the next financial crisis.  While it is still unclear, it is very possible that a bank or financial institution did not have sufficient high quality collateral and were frozen out of private repo markets.  Hence, the dramatic rate spike followed by Fed supplied liquidity. https://davidstockmanscontracorner.com/?p=359353&preview_id=359353&preview_nonce=4da5c191c7&preview=true

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In the meantime, with a little imagination, today’s problems in the repo market could be a warning that CLOs are turning to toxic waste, and, as a result, are developing into the next financial crisis.  While it is still unclear, it is very possible that a bank or financial institution did not have sufficient high quality collateral and were frozen out of private repo markets.  Hence, the dramatic rate spike followed by Fed supplied liquidity.

https://davidstockmanscontracorner.com/?p=359353&preview_id=359353&preview_nonce=4da5c191c7&preview=true

David Stockman
David Alan Stockman (born November 10, 1946) is a former businessman and U.S. politician who served as a Republican U.S. Representative from the state of Michigan (1977–1981) and as the Director of the Office of Management and Budget (1981–1985) under President Ronald Reagan.

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