Economic Policy Review Executive Summary  When the Back Office
Moved to the Front Burner: Settlement Fails in the Treasury
Market after 9/11  Recapping an article from the November 2002
issue Contact Authors E-mail authors  23 pages / 251 kb
Authors: Michael J. Fleming and Kenneth D. Garbade  Index of
executive summaries  Fleming and Garbade explain why a high rate
of settlement fails persisted after September11 despite actions
by the Federal Reserve and market participants to ameliorate the
problems caused by the attack on the World Trade Center. They
argue that fails rose initially as a result of the destruction
of records and communication facilities, but remained high
because the means typically used to avert or remedy
fails—borrowing a security though a special collateral
repurchase agreement—proved as costly as failing to deliver the
security.  The magnitude of the settlement fails problem that
arose in the aftermath of the attack was unprecedented in the
history of the Treasury securities market and l