A Brookings paper has proposed the Fed introduce an explicit facility to backstop the basis trade unwind, either by taking the other side directly or giving hedge funds direct access to the standing repo facility, representing a controversial direct hedge fund bailout unlike previous indirect interventions like LTCM.
factualpending
Speaker
Simon WhiteEvidence Quote
“a Brookings paper came out with a very controversial suggestion that maybe the Fed has to introduce a explicit facility to backstop the basis trade unwind...But either way it's crossing the Rubicon...they've never done a direct bailout of hedge funds [38:00]”
Created: 8/11/2026, 7:06:30 AM
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