One thing the financial crisis of 2007-09 revealed was that large and important parts of the financial system were operating largely outside the view of the public and of regulators. A key example of this “shadow banking” was the tri-party repo market, in which lenders extended short-term loans to borrowers pledging financial securities as collateral, with a bank serving as an intermediary between the two. The collapse of this market—nearly $3 trillion at that time—was considered by many to be a major factor behind the financial crisis, and reformers called for greater transparency.
In that spirit, the New York Fed began publishing data on the market in May 2010. Recently, those data have been made much more accessible through an interactive charting tool. The website allows users to easily track, over time, the size of the market, along with lending standards (“haircuts”) as well as how heavily concentrated market activity is among the largest participants. Also, in a short video, two New York Fed officials give background on the market and the various features of the site’s interactive graphics.
Peer into the shadows on the New York Fed's web site.
Joe Mahon is a Minneapolis Fed regional outreach director. Joe’s primary responsibilities involve tracking several sectors of the Ninth District economy, including agriculture, manufacturing, energy, and mining.