Since the financial crisis, some steps have been taken to shore up the potentially unstable debt market, known as the repo market, but Eric S. Rosengren, president of the Federal Reserve Bank of Boston, yesterday became the latest prominent regulator to call for a more ambitious overhaul of the repo market, the New York Times DealBook blog reported. In particular, he suggested that financial institutions making large use of repo borrowing should maintain higher levels of capital. “Broker-dealers can experience significant funding problems during times of financial stress,” he said yesterday. “Unfortunately that potential for problems has not been fully addressed.” The Dodd-Frank Act of 2010 and international regulatory agreements have introduced many new rules since the crisis that are aimed at making the financial system stronger. Still, some regulators, including Janet L. Yellen, the Fed chairwoman, and Daniel K. Tarullo, the Fed governor who oversees regulation, are still concerned about Wall Street’s heavy use of short-term debt markets to finance their operations.
