Reverse repurchase agreements involve the sale by the Fed ofsecurities from its portfolio with an agreement to buy the securities back at a slightly higher price at a later date.
He put a perverse twist on the repurchase trade, routinely used in the past to squeeze some additional income out of the Treasury securities that are traditionally on hand as part of normal business operations.
Initially, it described collective investment vehicles, often organised as private partnerships, that specialised in combining two investment techniques, short sales (borrowing a security and selling it in the hope of being able to repurchase it more cheaply before repaying the lender) and leverage (buying securities with borrowed money) in a way that reduced risk.