Why the Federal Reserve is not urgently considering regulation is bewildering [A lack of any morals?
Total corruption? Stupidity? Hard to say what is motivating the fed today]. As yet, the US Treasury has merely asked for market participants to sort out the situation themselves [The wonders of self-regulation]. That might help reduce fails but it will not eliminate them, and in panic periods they will simply creep back up. The global economy has significantly contracted since the collapse of Lehman Brothers, which spurred the fails to deliver. More market-shocking events are certain to lie ahead. The solution is simple – delivery needs to be enforced, and liquidity returned. If not, confidence in the US treasury markets will be lost. Loans made using treasuries as collateral will be reconsidered, bond markets priced off treasuries will further dry up and, with equity markets so volatile, central banks and investors will not know where to turn. Fails to deliver in the treasury markets are not a new phenomenon. There is data for fails for treasuries, agencies and mortgage-backed securit
