Publication
Apr 2010
Runs by prime-brokerage clients and derivatives counterparties were a central cause of the World Financial Crisis. Worried about potential losses, many hedge funds withdrew their assets from brokerage accounts at Bear Stearns and Lehman Brothers in the weeks before these banks failed. Although Morgan Stanley did not fail, it also suffered from the withdrawal of prime brokerage assets. These runs, together with runs by short-term creditors, precipitated Bear Stearns’ and Lehman’s demise.
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English (PDF, 9 pages, 95 KB) |
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Author | Squam Lake Working Group on Financial Regulation |
Series | CFR Working Papers |
Publisher | Council on Foreign Relations (CFR) |
Copyright | © 2010 Council on Foreign Relations (CFR) |