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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who wrote (84841)	8/10/2007 3:18:34 PM
From: Paul Kern	Read Replies (2) of 110194

Russ, I second that. It's not all that much considering the market and the repo from this morning is only for the weekend. The Fed clarified what they took for collateral at 1:15: Clarification of Collateral Tranches on Desk RP Operations Typically, when the Desk arranges RPs it accepts propositions from dealers in three collateral tranches. * In the first tranche, dealers may pledge only Treasury securities. * In the second tranche, dealers have the option to pledge federal agency debt in addition to Treasury securities. * In the third tranche, dealers have the option to pledge mortgage-backed securities issued or fully guaranteed by federal agencies in addition to federal agency debt or Treasury securities. From time to time, for operational simplicity, the Desk has arranged RPs just in the third tranche, under which dealers have the option to pledge either mortgage-backed securities issued or fully guaranteed by federal agencies, federal agency debt, or Treasury securities. Today's RPs were of this type. August 10, 2007 newyorkfed.org

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