The Wall Street Journal writes "Repos Played a Key Role in Lehman's Demise". The article says, "Six weeks before it went bankrupt, Lehman Brothers Holdings Inc. was effectively out of securities that could be used as collateral to back the short-term loans it needed to survive. The bank's subsequent scramble to stay alive exposed the murky but crucial role that short-term lending, done in a corner of Wall Street known as the repo market, plays in the financial world." It continues, "The battles Lehman had show that the repo market, which is the lifeblood of Wall Street, often isn't as simple and routine as some investors believe. The basic mechanics involve firms raising cash to fund their operations by posting high-quality assets, with a simultaneous obligation to repurchase them within days.... [F]actors combined with collapsing market conditions put repo agreements into a tailspin." The Journal quotes Stephen Lubben, a professor at Seton Hall, "The basic problem is that the investment banks have become highly dependent on the repo markets for their funding ... but they were using a whole bunch of nontraditional securities for those repo agreements." It adds, "The rare look into the repo market embedded in the report comes 18 months after Lehman Brothers collapsed in the U.S.'s largest bankruptcy filing."

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