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Repurchase Agreements and the Law: How Legislative Changes Fueled the Housing Bubble

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  • Fiona Maclachlan

Abstract

I examine the recent evolution of the law with respect to repurchase agreements. Repurchase agreements (repo) are short-term debt contracts that were central in the expansion of liquidity during the run-up to the financial crisis. The irresponsible and disruptive lending within the housing market was related to excessive financial institution leverage made possible through repo. A key issue in the law relating to repo is the status of the collateral in the event of bankruptcy of the borrower. I trace the development of this aspect of the law through interpretations of the bankruptcy code by the courts, as well as through legislated changes to the code.

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  • Fiona Maclachlan, 2014. "Repurchase Agreements and the Law: How Legislative Changes Fueled the Housing Bubble," Journal of Economic Issues, Taylor & Francis Journals, vol. 48(2), pages 515-522.
    • Handle: RePEc:mes:jeciss:v:48:y:2014:i:2:p:515-522
    DOI: 10.2753/JEI0021-3624480227
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    Cited by:

    1. Lewis, Brittany Almquist, 2023. "Creditor rights, collateral reuse, and credit supply," Journal of Financial Economics, Elsevier, vol. 149(3), pages 451-472.

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