The Wall Street Journal (online registration required): Regulators have spent the past five years trying to siphon risk out of the financial system, but the Federal Reserve sees one major piece of unfinished business: short-term funding.
In recent decades, such funding has become a sort of oil lubricating Wall Street's gears. Lenders—money-market funds, insurance companies, pension plans and others—provide temporary cash or securities to big banks, hedge funds, asset managers or other market participants that trade stocks and bonds. The borrowers can invest the cash or use securities-on-loan as leverage for other transactions.
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