Some New Fine Print In Hedge Fune Credit Lines

From the FT:

Wall St duo bring in new lending systems

The message is that "if our firm is in trouble, we would rather fund ourselves than fund you [hedge funds]", said a brokerage executive with knowledge of the arrangements, who added: "We would only use it if there were a real issue."

This is an understandable but not helpful devlopment. Closing the barn door after the horses are gone in hopes of keeping future horses in the barn. But it also has the effect of locking the old horses out. that is a weak metaphor. But reducing credit to large hedge funds that are still functioning reduces liquidty and even further reduces participation in an already thin marketplace.