What's the advantage of repurchase agreements over collateral backed loans? Is there any material difference between a repo and a collateral backed loan?
The one I can think of is that the collateral is owned by the lending party during the loan. So if the Fed uses this with treasuries they get to collect interest on it.
Why did the Fed adopt this as a tool over simple buying and selling? It seems to provide the same effect to the money supply and they don't need the interest from the treasury collateral given they return most of their money to the Treasury every year.
Repo and Securities Lending
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr529.pdf
Nominal page 2:

A repurchase agreement is the sale of securities coupled with an agreement to repurchase the securities, at a specified price, at a later date (see Duffie (1996) and Garbade (2006)). Securities lending agreements are economically similar to repo agreements.4 Both agreements resemble a collateralized loan, but their treatment under the U.S. bankruptcy law is more beneficial to cash lenders:    In the event of bankruptcy, cash lenders can typically sell their collateral, rather than be subject to an automatic stay as would be the case for a collateralized loan.

Two advantages are

Repo are short term self-liquidating positions which automatically run off the balance sheet under the terms of the deal; and

Collateral under Repo deals is available for sale by the lender if the counterparty goes bankrupt.