Without Fed intervention, the repo market is just big banks lending to each other overnight, using mostly risk-free assets as collateral. Why wouldn't this mar

Without Fed intervention, the repo market is just big banks lending to each other overnight, using mostly risk-free assets as collateral. Why wouldn't this market clear at a large spread above the fed funds rate? ... either a majority of banks are too low on capital reserves to participate in some lucrative low-risk loans, OR one or more unknown participants are close to insolvent and the others don't want counterparty exposure. Either way it's a dangerously close to a systemic liquidity crisis and the Fed is completely behind the ball.