When confidence in Bear Stearns collapsed in March 2008, the vulnerability of this market and its settlement procedures in particular became very clear. Today, almost seven years later, in no small measure thanks to the leadership and persistence of the Federal Reserve Bank of New York, the triparty repo settlement process has been substantially reengineered, with reliance on discretionary intraday credit essentially eliminated.
3 In addition, a smaller fraction of the market now involves the financing of lower-quality collateral, and far less of the overall funding is provided overnight and thus subject to daily rollover risk.