New York Fed Suggests Large Asset Managers Are Systemic Risk Due To Runs

As the debate regarding classifying large asset managers as systemically significant institutions – and subjecting them to a hoard of additional regulations – rages, the New York Federal Reserve weighs in with an opinion piece that points to systemic risk – and goes against conventional wisdom on the topic.

When investors all rush to the exit, it can lead to forced liquidation at fire sale prices

The February 18 post on the New York Fed’s Liberty Street Economics blog concludes that mutual funds can be subject to a “run” on assets, even when such funds do not utilize...