Federal Reserve Hedge Funds
Federal Reserve Says Banks Eased Credit to Hedge Funds
More banks said credit terms “eased somewhat” than said terms “tightened somewhat” in the three months ended in August, the Fed said today. Hedge funds and other investors tried harder to negotiate favorable price terms for deals, with 50 percent of dealers saying that clients “increased somewhat” or “increased considerably” their demands for concessions.
Increased competition from rivals and improvements in the financial strength of counterparties were the main reason that terms were loosened, according to the survey released by the Fed in Washington. Five of six respondents cited each factor as “very important” or “somewhat important” in their easing of terms.
The Fed started the survey in part because the financial crisis “highlighted that a significant volume of credit intermediation has moved outside of the traditional banking sector,” the central bank said in a report posted earlier this year on its website. Source