Editing Repurchase agreement (section)

== History ==
In the United States, repos have been used from as early as 1917 when wartime taxes made older forms of lending less attractive. At first, repos were used just by the [[Federal Reserve System|Federal Reserve]] to lend to other banks, but the practice soon spread to other market participants. The use of repos expanded in the 1920s, fell away through the [[Great Depression]] and WWII, then expanded once again in the 1950s, enjoying rapid growth in the 1970s and 1980s in part due to computer technology.<ref name = "NYconv"/>

According to Yale economist [[Gary Gorton]], repo evolved to provide large non-depository financial institutions with a method of secured lending analogous to the depository insurance provided by the government in traditional banking, with the collateral acting as the guarantee for the investor.<ref name = "Gorton_2009"/>

In 1982, the failure of Drysdale Government Securities led to a loss of $285 million for [[Chase Bank|Chase Manhattan Bank]].  This resulted in a change in how accrued interest is used in calculating the value of the repo securities.  In the same year, the failure of Lombard-Wall, Inc. resulted in a change in the federal bankruptcy laws pertaining to repos.<ref>Wall St. Securities Firm Files For Bankruptcy ''New York Times'' 13 August 1982 [https://www.nytimes.com/1982/08/13/business/wall-st-securities-firm-files-for-bankruptcy.html]</ref><ref>The Evolution of Repo Contracting Conventions in the 1980s ''FRBNY Economic Policy Review''; May 2006 [https://www.newyorkfed.org/medialibrary/media/research/epr/06v12n1/0605garbpdf.pdf]</ref>  The failure of [[ESM Government Securities]] in 1985 led to the closing of [[Home State Savings Bank]] in Ohio and a run on other banks insured by the private-insurance Ohio Deposit Guarantee Fund.  The failure of these and other firms led to the enactment of the Government Securities Act of 1986.<ref>{{Cite web|url=http://digitalcommons.law.scu.edu/cgi/viewcontent.cgi?article=1842&context=lawreview|title=The Government Securities Market: In the Wake of ESM ''Santa Clara Law Review'' January 1, 1987}}</ref>

In 2007–2008, a [[bank run|run]] on the repo market, in which funding for investment banks was either unavailable or at very high interest rates, was a key aspect of the [[subprime mortgage crisis]] that led to the [[Great Recession]].<ref name="Gorton_2009"/>

In July 2011, concerns arose among bankers and the financial press that if the [[2011 U.S. debt ceiling crisis]] led to a default, it could cause considerable disruption to the repo market. This was because treasuries are the most commonly used collateral in the US repo market, and as a default would have downgraded the value of treasuries, it could have resulted in repo borrowers having to post far more collateral.
<ref>{{Cite news
| url= http://www.ft.com/cms/s/0/190a2cd6-b925-11e0-bd87-00144feabdc0.html#axzz1T7z00Z9x |archive-url=https://ghostarchive.org/archive/ENBKP |archive-date=10 December 2022 |url-access=subscription |url-status=live
| title= US default would spell turmoil for the repo market
| work= [[Financial Times]]
| author= Darrell Duffie and Anil K Kashyap
| date = 27 July 2011
| access-date=29 July 2011}}
</ref>

During September 2019, the U.S. Federal Reserve intervened in the role of investor to provide funds in the repo markets, when [[September 2019 events in the U.S. repo markets|overnight lending rates jumped]] due to a series of technical factors that had limited the supply of funds available.<ref name = "NYT_WSBuzz"/>

=== Market size ===
[[File:SOFR Rate Components.png|thumb|Composition of SOFR Rate]]

''[[The New York Times]]'' reported in September 2019 that an estimated $1 trillion per day in collateral value is transacted in the U.S. repo markets.<ref name="NYT_WSBuzz" /> The Federal Reserve Bank of New York reports daily repo collateral volume for different types of repo arrangements. As of 24 October 2019, volumes were: secured overnight financing rate ([[SOFR]]) $1,086 billion; broad general collateral rate (BGCR) $453 billion, and tri-party general collateral rate (TGCR) $425 billion.<ref name="FRBNY_Repo">{{Cite news|url= https://www.newyorkfed.org/markets/treasury-repo-reference-rates|title= Treasury Repo Reference Rates|work= [[Federal Reserve]]|access-date=26 October 2019}}</ref>  These figures however, are not additive, as the latter 2 are merely components of the former, SOFR.<ref>{{Cite web|url=https://www.newyorkfed.org/medialibrary/Microsites/arrc/files/2019/arrc_contingency_methodology.pdf|title=Reference Rate Production Update ARRC Meeting|last=Sherman|first=Scott|date=26 June 2019|website=Federal Reserve Bank of New York|access-date=21 November 2019}}</ref>

The Federal Reserve and the European Repo and Collateral Council (a body of the [[International Capital Market Association]]) have tried to estimate the size of their respective repo markets. At the end of 2004, the US repo market reached US$5 trillion. Especially in the US and to a lesser degree in Europe, the repo market contracted in 2008 as a result of the [[2008 financial crisis]]. But, by mid-2010, the market had largely recovered and, at least in Europe, had grown to exceed its pre-crisis peak.<ref name = "Gillian"/>