...what Chris is talking about is the practice of counting a repo transaction as "cash." Well, it only is cash if the asset is known to be good at face value at any point up to maturity.
There is at present only one security that can be trusted to be this way: US Treasuries.
Which is a problem, you see, because as it turned out, the actual US banks' counterparty exposure (in the 2008 fiasco) was TWENTY TIMES the initially-reported number.
See, the US investment and commercial banks used "off-balance-sheet" vehicles (principally offshore entities) to bury the bones.
So, while OCC says there's 'de minimis' exposure, remember that the OCC was off by 95% in 2008.
Hmmmmm.
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