''It turns out
that one-fourth of the mortgages supposedly sold to investors were
actually held by the bankers. Those bankers often used the mortgages as
collateral to get overnight loans from each other and from other
financial institutions.
This kind of
borrowing has a name. It’s called repurchase (or “repo”) borrowing,
because technically the borrower sells the collateral to the lender and
promises to buy it back, to “repurchase” it, the next day – although
usually the lender agrees to renew the loan for another day.''
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