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Before the Financial Crisis of 2007-2008, financial institutions used repurchase agreements to fund subprime mortgages Essentially, they were funding longer-term assets with short term uses
Before the Financial Crisis of 2007-2008, financial institutions used repurchase agreements to fund subprime mortgages Essentially, they were funding longer-term assets with short term uses of funds. However, during the summer of 2007, these institutions were unable to roll over maturity repurchase agreements, thus, freezing their sources of funds. This is an example of O liquidity risk operational risk O credit risk O operational risk
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