Now the regulators call for Stays on Repo and Sec Lending deals

Global banking regulators are sounding the alarm that trillions of dollars’ worth of short-term loans could complicate their efforts to handle a failing financial institution, said people familiar with the talks.

The regulators are calling for changes to repurchase agreements (repos), and securities-lending agreements, the people familiar said.

The plan is regulators’ latest bid to end so-called “too-big-to-fail” firms, which are so interconnected that regulators believe their demise risks bringing the entire financial system to its knees. In a bid to prevent a replay of 2008, when Lehman Brothers Holdings Inc. failed after running out of appropriate collateral for repo loans, regulators have made separate changes to the workings of the repo markets.

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