[a repo is a secured loan since the lender gets a collateral for the cash being lent out -- the only difference is that the ownership of the collateral is transferred in the case of repos, whereas under a loan the borrower retains ownership of the collateral. The difference between the selling price and the repurchase price is the effective interest in these transaction.
Rates on repo are different from LIBOR rates, since repos are considered a secured loan whereas the LIBOR is used for unsecured interbank lending.
The US repo market is estimated to be around $4.5 trillion in 2008. --www.wikinvest.com]
Traditionally, banks are to lend out 100% of deposits. However, in the era of QE. Banks can make more money by investing in the stock market, and buying oil rigs, airports and even speculating in the derivatives market. How banks get around Glass-Steagall which limited banking practices to banking is via the Repo market. The mega-Banks take the QE money, buy US Bonds, then put those bonds up as collateral on the Repo market and get "laundered money" in exchange to then speculate with in the markets instead of using the reserves to issue small-business loans.