The presence of Wall Street loans behind complex risk transfer trades suggests that exposures intended to be shifted away remain tied to the banking system. These synthetic risk transfer (SRT) trades, which have been approved by regulators as a way to shift risk out of the banking system, are often underpinned by loans from other banks. JPMorgan's risk swap, for instance, ended up at rival banks. The next move involves banks packaging their synthetic risk transfer repo loans and issuing SRTs against them. US credit risk transfers are starting to gain popularity.
What could possibly go wrong? The lurking presence of Wall Street loans behind some complex risk transfer trades suggests exposures that were meant to be shifted elsewhere remain tied to the banking system https://t.co/f7U27uwyjO via @markets
The next move is for a bank to package up a bunch of its synthetic risk transfer repo loans and issue SRTs against them. https://t.co/Dqa5UgEQZ8 via @opinion
So-called SRT trades have been heralded by Wall Street and approved by regulators as an acceptable way of shifting risk out of the banking system. But plenty of the trades are underpinned by loans from...other banks. Latest w/@estebanduarte4 @ArroyoNieto https://t.co/th1wSTL75b
Interesting dig into use of leverage to juice the US credit risk transfers that are starting to gain popularity >> JPMorgan Risk Swap Ends Up at a Familiar Place: Rival Banks via @markets https://t.co/D9YGJibF3t https://t.co/UiHIuxKxRb
The lurking presence of Wall Street loans behind some complex risk transfer trades suggests exposures that were meant to be shifted elsewhere remain tied to the banking system https://t.co/llbW25oqZd via @markets