Too big to lend? JPMorgan's cash tweaks take a toll on U.S. 'repo' market. DHenryReports:
) has become so big that some rival banks and analysts say changes to its $2.7 trillion balance sheet were a factor in a spike last month in the U.S. “repo” market, which is crucial to many borrowers.
Analysts and bank rivals said big changes JPMorgan made in its balance sheet played a role in the spike in the repo market, which is an important adjunct to the Fed Funds market and used by the Fed to influence interest rates. “It was a very big move,” said one person who watches bank positions at the Fed but did not want to be named. An executive at a competing bank called the shift “massive”.For example, Bank of America Corp , the second-biggest U.S. bank by assets, with a $2.4 trillion balance sheet, took down 30% of its deposits, a $29 billion reduction.
JPMorgan also needs cash for sudden demands by corporate depositors and to meet government requirements for reserves on checking account deposits.
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