The Fed got the message - the Jaws jokes worked - "we're gonna need a bigger boat".
The New York Fed on Wednesday announced it has increased the size of both its term and overnight repos scheduled for September 26. The 14-day term operation will now have an aggregate limit of $60 billion compared to $30 billion, while the O/N operation will be for up to $100 billion, versus $75 billion previously.
The announcement follows a string of oversubscriptions, including Wednesday's O/N operation, which saw dealers submit almost $92 billion in securities for the $75 billion agreement. On Tuesday, the first of three 14-day term repos was two times oversubscribed.
Read more: ‘We’re Gonna Need A Bigger Repo’
Former Minneapolis Fed chief Narayana Kocherlakota penned a Bloomberg Op-Ed on Wednesday that struck a decidedly worried tone.
Although he isn't particularly concerned about the Fed achieving its goals and doesn't seem to think last week's money market chaos imperils the central bank's ability to conduct monetary policy, Kocherlakota does think "something’s very wrong with the financial system".
Essentially, he blames the post-crisis regulatory regime which he frets "has di
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