Window Dressing

Fed's reverse repo activity in Treasuries with major banks.  When I was on the corporate staff of a large conglomerate, we eventually busted one of our divisions for pushing inventory out the door on the last day of the quarter, only to have most of it returned a few days later, all as a way to boost quarterly revenues.  This appears to be the bankers' equivalent of such channel-stuffing.

Reverse Repo


Are the Feds really fooled by artificial quarter-end liquidity that is provided by the Feds themselves?  The stress-tests remind me of the story about FDR declaring a bank holiday, and claiming to have allowed only the strong banks to reopen the next day.  How did they know which were strong and weak?  They didn't, really.  The whole exercise was a PR ploy to boost consumer confidence in the banking industry.

Update:  Yep, there it all goes back where it came from

Reverse Repo April 1 2014


  1. JoshK:

    I think the direction is backwards on this. The fed is taking in cash from the dealers and pushing them to take treasuries. Not sure why the spike, you can get 200m of repo pretty easily at current rates.

  2. mlhouse:

    It is amazing what corporations are allowed to do in the short term interests of making their number.

    I just heard of a situation that I believe MUST be illegal. If it isn't you have to wonder why it isn't. This corporation pays an annual bonus to employees. Like most bonuses, these costs are incurred in the current year and paid early in the next. This corporation was not going to make their earnings per share estimate that triggered all of the executives bonuses. So, what they did was to only amortized 80% of their bonus pool so that they made their numbers and the executives got paid (this company paid their CEO over $100 million in the previous year, $1.2 BILLION to executives as compensation on earnings of $8 billion).

    Like I said, this has to be illegal because they are a publically traded company that is misreporting their costs that will deceive shareholders of their value while maximizing the executive compensation.

    The other thing I cannot understand is why financial institutions accept the level of compensation paid to US executives. The owners of most corporations are a collection of insitutional investors, mutual funds, hedge funds. I cannot figure it out unless there is something going on behind the scenes.

  3. Matthew Slyfield:

    " I cannot figure it out unless there is something going on behind the scenes."

    Pay no attention to the man behind the curtain.