The paper by Gary B. Gorton and Andrew Metrick, titled "Securitized Banking and the Run on Repo," explores the 2007-2008 financial crisis, focusing on the run on the repurchase (repo) market, which is a critical short-term financing mechanism for securitized activities and financial institutions. The authors argue that the crisis was driven by the combination of securitization and repo finance, which they term "securitized banking." They use a novel dataset that includes credit spreads for hundreds of securitized bonds to trace the spread of the crisis from subprime housing-related assets to other markets. The key finding is that changes in the "LIB-OIS" spread, a proxy for counterparty risk, were strongly correlated with changes in credit spreads and repo rates for securitized bonds. These changes implied higher uncertainty about bank solvency and lower values for repo collateral, leading to increased repo "haircuts" and effectively insolvency for the U.S. banking system since the Great Depression. The paper also discusses the differences between traditional banking and securitized banking, and provides a detailed analysis of the institutional background, state variables, and empirical results to support their arguments.The paper by Gary B. Gorton and Andrew Metrick, titled "Securitized Banking and the Run on Repo," explores the 2007-2008 financial crisis, focusing on the run on the repurchase (repo) market, which is a critical short-term financing mechanism for securitized activities and financial institutions. The authors argue that the crisis was driven by the combination of securitization and repo finance, which they term "securitized banking." They use a novel dataset that includes credit spreads for hundreds of securitized bonds to trace the spread of the crisis from subprime housing-related assets to other markets. The key finding is that changes in the "LIB-OIS" spread, a proxy for counterparty risk, were strongly correlated with changes in credit spreads and repo rates for securitized bonds. These changes implied higher uncertainty about bank solvency and lower values for repo collateral, leading to increased repo "haircuts" and effectively insolvency for the U.S. banking system since the Great Depression. The paper also discusses the differences between traditional banking and securitized banking, and provides a detailed analysis of the institutional background, state variables, and empirical results to support their arguments.