Witnesses and members used the hearing to outline the risk that expanding Treasury issuance could outpace the capacity of intermediaries to absorb it.

James Tabakki, who represents independent dealers, emphasized that the key constraint is financing (repo) capacity rather than inventory, and warned that a lack of financing access can cause spikes in funding rates. He said access to the Fed’s standing repo facility is limited when participants’ balance sheets are full and recommended broader access and standardized haircuts for hedge‑fund financing.

Dr. Haoxong Zhu and other witnesses highlighted the potential upside of more active floating‑rate Treasury issuance: by indexing coupon payments to short‑term rates, floating‑rate notes can materially reduce interest‑rate risk for investors and therefore lower risk premiums demanded by market participants.

Members repeatedly returned to the question of thresholds: whether adjustments to the supplementary leverage ratio, broader adoption of central clearing, increased post‑trade transparency, and incentives for regional and mid‑sized dealers could collectively make the market resilient to trillions more in issuance. Witnesses said these reforms together could materially increase capacity but cautioned that estimates are model‑dependent and require further study.

No formal legislative or regulatory actions were taken at the hearing; members signaled interest in further oversight and written follow‑up from witnesses.