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For context, DB’s latest balance sheet has their total assets at $1.3Tn. Net assets and shareholder equity on the balance sheet are obviously far lower due to l

For context, DB’s latest balance sheet has their total assets at $1.3Tn. Net assets and shareholder equity on the balance sheet are obviously far lower due to liabilities. Point is, the apparent loan is greater than their entire assets and much greater than all their liabilities. Unless this 1 publicly traded bank is carrying trillions in secret liabilities, why would they even borrow that much from the Fed.

MatteoFrigo 5y ago
TFA has no idea what they are talking about. They are just adding the amount of rolled-over repos. For example, assume that I lend you $1000 for one day. The following day you pay me back $1000 plus interest, and I lend you $1000 for another day. We keep going for 1000 days, rolling over the debt. TFA would say I have lent you $1M. In reality, I have lent you $1000 for three years or so.
- thawaya3113 5y ago
  That’s unbelievable and makes no sense. Why would you cumulate overnight repos…
- MegaButts 5y ago
  > They are just adding the amount of rolled-over repos. Why do you think this?
  - MatteoFrigo 5y ago
    Two reasons. First, TFA states as much: "repo program that provided nearly $20 TRILLION in cumulative loans to Wall Street". Second, the Sep 2019 repo crisis is well-known, it lasted multiple weeks, and it was big enough that the Fed wrote a postmortem about it: https://www.federalreserve.gov/econres/notes/feds-notes/what-happened-in-money-markets-in-september-2019-20200227.htm https://www.federalreserve.gov/econres/notes/feds-notes/what... You can read the details, but the Fed offered very short-term loans in the range of tens of billions, rolled over for an unusually long time.
- thawaya3113 5y ago
  Good explainer on repos. https://www.brookings.edu/blog/up-front/2020/01/28/what-is-the-repo-market-and-why-does-it-matter/ https://www.brookings.edu/blog/up-front/2020/01/28/what-is-t... It’s a large numbers market. I guess that’s why TFA liked it. It gave them big scary numbers to use.

MatteoFrigo 5y ago

TFA has no idea what they are talking about. They are just adding the amount of rolled-over repos. For example, assume that I lend you $1000 for one day. The following day you pay me back $1000 plus interest, and I lend you $1000 for another day. We keep going for 1000 days, rolling over the debt. TFA would say I have lent you $1M. In reality, I have lent you $1000 for three years or so.

thawaya3113 5y ago
That’s unbelievable and makes no sense. Why would you cumulate overnight repos…
MegaButts 5y ago
> They are just adding the amount of rolled-over repos. Why do you think this?
- MatteoFrigo 5y ago
  Two reasons. First, TFA states as much: "repo program that provided nearly $20 TRILLION in cumulative loans to Wall Street". Second, the Sep 2019 repo crisis is well-known, it lasted multiple weeks, and it was big enough that the Fed wrote a postmortem about it: https://www.federalreserve.gov/econres/notes/feds-notes/what-happened-in-money-markets-in-september-2019-20200227.htm https://www.federalreserve.gov/econres/notes/feds-notes/what... You can read the details, but the Fed offered very short-term loans in the range of tens of billions, rolled over for an unusually long time.
thawaya3113 5y ago
Good explainer on repos. https://www.brookings.edu/blog/up-front/2020/01/28/what-is-the-repo-market-and-why-does-it-matter/ https://www.brookings.edu/blog/up-front/2020/01/28/what-is-t... It’s a large numbers market. I guess that’s why TFA liked it. It gave them big scary numbers to use.