US Tri-Party Repo Reform: "Everyday you are still rolling the dice"

The US Senate held testimony yesterday on US tri-party repo reform and had some criticisms. Most notable, the Senate wanted to know who was in charge and couldn’t get a straight answer. The actual testimony is worth watching for an hour.

From C-Span, the US television network for US government hearings:

“Senators Jack Reed & Mike Crapo say it’s crucial to clarify which government regulatory agency has sole oversight authority of the tri-party repo market. The Chairman and Ranking Member of the Senate Banking Subcommittee on Securities, Insurance & Investment convened a hearing Thursday on the potential risks repos pose to the broader U.S. financial system.

“In testimony, Matthew Eichner, the Federal Reserve’s Research and Statistics Division Deputy Director listed a few agencies but couldn’t name the lead oversight agency which concerned lawmakers. Eichner stressed that while the market has improved its risk management since the 2008 financial crisis, he believes vulnerabilities remain and need to be addressed. Representatives from two clearing banks, BNY Mellon ad Morgan Stanley, and an investors’ group also testified.”

Check out the video at C-Span starting at minute 37. Dep. Director Eichner is asked who is actually responsible for resolving tri-party repo reform and has trouble giving a straight answer. A little later Senator Jack Reed asks Karen Peetz, Vice Chairman of BNY Mellon, “Everyday you are still rolling the dice in some respects. Can you elaborate?” (Minute 38:50.) He seemed satisfied by Ms. Peetz’s response by the end, but this appears to be an area where the US Senate would like faster resolution.

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