Puts in the Shadow
In the aftermath of the Lehman crisis, payouts (i.e., taxpayer bailouts) in various forms were provided by governments to a variety of financial institutions and markets that were outside the regulatory perimeter - the Â "shadow" banking system. Although recent regulatory proposals attempt to reduce these Â "puts", we provide examples from non-banking activities within a bank, money market funds, Triparty repo, OTC derivatives market, collateral with central banks, and issuance of floating rate notes etc., that these risks remain. We suggest that a regulatory environment where puts are not ambiguous will likely lower the cost of bail-outs after a crisis.
|Date of creation:||01 Sep 2012|
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- Duffee, Gregory R, 1996.
" Idiosyncratic Variation of Treasury Bill Yields,"
Journal of Finance,
American Finance Association, vol. 51(2), pages 527-551, June.
- Adam Copeland & Antoine Martin & Michael Walker, 2010. "The tri-party repo market before the 2010 reforms," Staff Reports 477, Federal Reserve Bank of New York.
- Patrick E. McCabe & Marco Cipriani & Michael Holscher & Antoine Martin, 2012.
"The minimum balance at risk: a proposal to mitigate the systemic risks posed by money market funds,"
Finance and Economics Discussion Series
2012-47, Board of Governors of the Federal Reserve System (U.S.).
- Patrick E. McCabe & Marco Cipriani & Michael Holscher & Antoine Martin, 2012. "The minimum balance at risk: a proposal to mitigate the systemic risks posed by money market funds," Staff Reports 564, Federal Reserve Bank of New York.
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