Financial Markets and Institutions (2-downloads)

haircuts. For example, if a borrower took out a $100 million loan in a repo agree-

ment, it might have to post $105 million of mortgage-backed securities as collat-

eral, and the haircut is then 5%.

1

John Taylor, “Housing and Monetary Policy,” in Federal Reserve Bank of Kansas City, Housing,

Housing Finance and Monetary Policy (Kansas City: Federal Reserve Bank of Kansas City, 2007),

pp. 463–476.

2

Ben S. Bernanke, “Monetary Policy and the Housing Bubble,” speech given at the annual meeting of

the American Economic Association, Atlanta Georgia, January 3, 2010, 

http://www.federalreserve.gov/

newsevents/speech/bernanke20100103a.htm

.

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