Analysts and Bank Evaluation

Now we find out about repos by reports in the media of their use in the past. Repos are supposed to be very short term loans, even over-night. To get troublesome assets off the books they were treated as sales, and then taken right back, as loans, after the accounts were noted as sales.

We hear, for example, how they may have contributed to the financial problems at Lehman Brothers and the Citi Bank. We find out everything from media reportage after the so-called deluge has occurred.

Much of the bookkeeping info that would have tipped off repo use would have been helpful if picked up in time by bank analysts.

Why didn’t bank analysts at least have asked banks how repos were being reported?

Federal regulators certainly failed to do so, but bank analysts never asked either.