A Wall Street Domino TheoryNew York Times, March 15, 2008
Summary: "The Federal Reserve's unusual decision to provide emergency assistance to Bear Stearns underscores a long-building concern that one failure could spread across the financial system."
S3 Partners citations:
[Bear Stearns] is also among the biggest firms in the prime brokerage business, or the financing of hedge funds. In recent weeks, nervous fund managers have scrambled to protect themselves. Robert Sloan, who is the managing partner at S3 Partners, a financing specialist that works with hedge funds, has shifted $25 billion out of Bear Stearns accounts in the last two months, he said.
"The problem is the financing of the hedge fund industry is very concentrated and very brittle," Mr. Sloan said. "If they go under, you will have thousands of funds frozen out," he said, adding that everyone might then have to wait for a court to name a receiver before business could resume."
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