This appears to be an alarmist article about something pretty pedestrian.
1. The fed has intentionally been pulling liquidity out of the system with quantitative tightening. Over the last few years, the fed has shrunk its balance sheet by several trillion dollars (many times what this article is talking about). The fact that there is liquidity tightness is a sign that the fed has succeeded. And they are already stopping their balance sheet run-off, so there is no reason to expect this to get worse.
2. Repos are a standard tool of the fed. This is the system working as designed when there are liquidity issues.
3. It is not even clear to me that there are liquidity issues. This looks more like window dressing. On the 31st, banks and others make themselves look a bit prettier for their regulators and shareholders by holding more cash. This always makes overnight funding a little more expensive overnight on the 31st, so more banks are more likely to use fed lines, either repos or fed funds. That doesn't mean there is a problem or sone kind of shadowy bail out. This happens every year, and to a lesser extent, every quarter end.
The way that this is written feels intentionally exaggerated. E.g. comparing how much banks earned in profit to how much they are pulling/could pull from thr fed makes no sense. Banks are highly levered. They earn low returns on assets (1-2%), so balance sheet items always look a lot bigger than profits. Thats just the business model of banks. Just wait to see how many years it will take them to earn enough money to pay back their deposits! Its comparing apples and oranges, and anyone who thinks about banks seriously knows that.
Without weighing in on the article or your analysis, I would say that any viewpoint on monetary matters that doesn't gravitate in on May 2026 as a possible huge discontinuity is sort of prima facie counterproductive.
There's very little bandwidth and audience on monetary matters to start with. If we're talking about anything else, we're detracting from that.
Thank you. From that link: "Borrowing from the Fed at year-end is also tied to market forces, where an upward drift in money market rates can make it cheaper to borrow from the Fed compared to private sources. Most expect Wednesday's borrowing surge will dissipate over coming days as more normal trading conditions reassert themselves.
The activity at the standing repo operation is highly unlikely to signal any sort of market trouble."
The breathlessly reported OP credits their man with scouring the halls of the Fed for a report that they post on their website every single day, which literally everyone on Wall Street knows how to find.
> In accordance with the FOMC implementation note issued December 10, 2025, the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York will make the following adjustments to standing overnight repurchase agreement (repo) operations effective December 11, 2025.
> To get the cash, banks hand over Treasury notes and bonds, mortgages, and other securities, known as a “repo.” Then they get to borrow cash at face value.
It is a partial definition. To use the repo facility, borrowers don't just stake their assets, they also promise to re-buy them hours later at a higher price. It is literally overnight money issued in exchange for high-quality assets. If somehow the borrower goes broke within a few minutes, the Fed is still holding their assets.
Edit: I forgot about the haircut. The repo only lends out 98% of the staked assets value.
When the interest rate was zero they could borrow infinite overnight funds for nothing. When the interest rate is 3.75% it stops being a free facility. Also, post COVID, the Fed was flooding the economy with cash and market participants actually had the opposite problem: they were coming to the reverse repo facility (https://www.newyorkfed.org/markets/desk-operations/reverse-r...). That flood has subsided, so repo activity is returning to pre-COVID norms.
Despite the tone of the OP, the people who exchange securities for cash at the repo facility are paying not just the fed rate, but a higher punitive rate. It is expensive, by design, so banks seek liquidity deals privately if they can. It is not, in any sense, bags of money from helicopters.
> [JPMorgan Chase & Co.] revealed it is on the hook to deliver more than 5,900 tons of silver it doesn’t have. ... The bank sold contracts for silver it didn’t own, expecting the price would fall.
It looks like the gist of the article's assertion is that since the Fed has ramped up repo operations since October 2025, they're seemingly covering a liquidity crunch being experienced by big banks. This support this assertion with the fact the fed eliminated the $500b limit in asset value that the Fed can give loans for [1] (although a max of $40b still exists per proposition*). The article also links a possible motivation in JP Morgan being in a losing short on silver in the commodities market.
The article is wordier than it needs to be, but I think it presents a solid argument. Some other interesting things I've observed is that the discount window website started advertising 'Discount Window Direct' on its homepage in June [2] (which could be a sign that there has been more inquiries about it) and that the pickup in the repo market being in the latter half of 2025 might also be correlated with the closing of the Bank Term Funding Program in March 2025 [3][4].
Apparently JP Morgan is long silver and they've been accumulating massive quantities of physical silver over the years. Haven't confirmed myself but supposedly this is public now.
This is typical garbage finance reporting. This is nothing more than overnight repo. It is a normal exchange of marketable securities for cash (or reverse). It is very common to see huge increases at quarter-end and year-end. This is not a "secret bailout". What about this article is exclusive as they claim in the header?
Why are big banks so dependent on repeatedly borrowing from the Fed? These banks wouldn't even exist if not for the Fed bailing them with cheap loans or free money ever so often. I will say what I have always said... these banks should be allowed to fail.
This appears to be an alarmist article about something pretty pedestrian. 1. The fed has intentionally been pulling liquidity out of the system with quantitative tightening. Over the last few years, the fed has shrunk its balance sheet by several trillion dollars (many times what this article is talking about). The fact that there is liquidity tightness is a sign that the fed has succeeded. And they are already stopping their balance sheet run-off, so there is no reason to expect this to get worse. 2. Repos are a standard tool of the fed. This is the system working as designed when there are liquidity issues. 3. It is not even clear to me that there are liquidity issues. This looks more like window dressing. On the 31st, banks and others make themselves look a bit prettier for their regulators and shareholders by holding more cash. This always makes overnight funding a little more expensive overnight on the 31st, so more banks are more likely to use fed lines, either repos or fed funds. That doesn't mean there is a problem or sone kind of shadowy bail out. This happens every year, and to a lesser extent, every quarter end.
The way that this is written feels intentionally exaggerated. E.g. comparing how much banks earned in profit to how much they are pulling/could pull from thr fed makes no sense. Banks are highly levered. They earn low returns on assets (1-2%), so balance sheet items always look a lot bigger than profits. Thats just the business model of banks. Just wait to see how many years it will take them to earn enough money to pay back their deposits! Its comparing apples and oranges, and anyone who thinks about banks seriously knows that.
Without weighing in on the article or your analysis, I would say that any viewpoint on monetary matters that doesn't gravitate in on May 2026 as a possible huge discontinuity is sort of prima facie counterproductive.
There's very little bandwidth and audience on monetary matters to start with. If we're talking about anything else, we're detracting from that.
Here's a less editorialized article from Reuters: https://www.reuters.com/business/finance/banks-tap-record-li...
Thanks. Here's an alternate Reuters link: http://archive.today/GWDYr
Thank you. From that link: "Borrowing from the Fed at year-end is also tied to market forces, where an upward drift in money market rates can make it cheaper to borrow from the Fed compared to private sources. Most expect Wednesday's borrowing surge will dissipate over coming days as more normal trading conditions reassert themselves. The activity at the standing repo operation is highly unlikely to signal any sort of market trouble."
The breathlessly reported OP credits their man with scouring the halls of the Fed for a report that they post on their website every single day, which literally everyone on Wall Street knows how to find.
https://www.newyorkfed.org/markets/desk-operations/repo
I think it's just repo:
> In accordance with the FOMC implementation note issued December 10, 2025, the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York will make the following adjustments to standing overnight repurchase agreement (repo) operations effective December 11, 2025.
https://www.federalreserve.gov/monetarypolicy/standing-overn...
The chart is about 'repo operations.' I don't think I trust this website to properly explain what those are or what it means.
They say
> To get the cash, banks hand over Treasury notes and bonds, mortgages, and other securities, known as a “repo.” Then they get to borrow cash at face value.
Does that meet your standards?
It is a partial definition. To use the repo facility, borrowers don't just stake their assets, they also promise to re-buy them hours later at a higher price. It is literally overnight money issued in exchange for high-quality assets. If somehow the borrower goes broke within a few minutes, the Fed is still holding their assets.
Edit: I forgot about the haircut. The repo only lends out 98% of the staked assets value.
Imagine zooming out the chart to a relevant timeframe.
Bottom of https://www.newyorkfed.org/markets/desk-operations/repo ... click "all"
Now I'm curious. I don't understand what repo is, but why did it not happen at all for 5 years?
When the interest rate was zero they could borrow infinite overnight funds for nothing. When the interest rate is 3.75% it stops being a free facility. Also, post COVID, the Fed was flooding the economy with cash and market participants actually had the opposite problem: they were coming to the reverse repo facility (https://www.newyorkfed.org/markets/desk-operations/reverse-r...). That flood has subsided, so repo activity is returning to pre-COVID norms.
Despite the tone of the OP, the people who exchange securities for cash at the repo facility are paying not just the fed rate, but a higher punitive rate. It is expensive, by design, so banks seek liquidity deals privately if they can. It is not, in any sense, bags of money from helicopters.
> [JPMorgan Chase & Co.] revealed it is on the hook to deliver more than 5,900 tons of silver it doesn’t have. ... The bank sold contracts for silver it didn’t own, expecting the price would fall.
Where was the stress test for that little gamble?
It was in the subprime crisis, bailouts, and jail time for corrupt banking executives - turned out they have nothing to be stressed about!
It looks like the gist of the article's assertion is that since the Fed has ramped up repo operations since October 2025, they're seemingly covering a liquidity crunch being experienced by big banks. This support this assertion with the fact the fed eliminated the $500b limit in asset value that the Fed can give loans for [1] (although a max of $40b still exists per proposition*). The article also links a possible motivation in JP Morgan being in a losing short on silver in the commodities market.
The article is wordier than it needs to be, but I think it presents a solid argument. Some other interesting things I've observed is that the discount window website started advertising 'Discount Window Direct' on its homepage in June [2] (which could be a sign that there has been more inquiries about it) and that the pickup in the repo market being in the latter half of 2025 might also be correlated with the closing of the Bank Term Funding Program in March 2025 [3][4].
[1] https://www.newyorkfed.org/markets/opolicy/operating_policy_...
[2] https://www.frbdiscountwindow.org/
[3] https://www.federalreserve.gov/newsevents/pressreleases/mone...
[4] https://fred.stlouisfed.org/series/H41RESPPALDKNWW
Where is the source for the claim that JPMorgan has to deliver silver it doesn't have?
Apparently JP Morgan is long silver and they've been accumulating massive quantities of physical silver over the years. Haven't confirmed myself but supposedly this is public now.
Longs don't have to deliver but take delivery so that adds more to the confusion.
This is typical garbage finance reporting. This is nothing more than overnight repo. It is a normal exchange of marketable securities for cash (or reverse). It is very common to see huge increases at quarter-end and year-end. This is not a "secret bailout". What about this article is exclusive as they claim in the header?
Why are big banks so dependent on repeatedly borrowing from the Fed? These banks wouldn't even exist if not for the Fed bailing them with cheap loans or free money ever so often. I will say what I have always said... these banks should be allowed to fail.
It's not a bailout but the private market should be able to clear trades without central bank resort
so, watch this space