If there is one lesson to be drawn from the financial crisis, it is that the rapid withdrawal of funding by short-term credit providers can lead to systemic problems as consequential as those associated with classic runs on traditional banks.
5 When financial intermediaries must rapidly liquidate a substantial amount of longer-term assets that they can no longer fund, the impact can reverberate throughout the financial system. The resulting declines in asset prices can trigger margin calls on other investors, who themselves may need to de-lever by selling their own holdings, adding to the fire sale-induced price impact on these, and potentially other, assets.