While this approach may have appeared to be an easy source of profit, it had the disadvantage of leaving those banks exposed to devastating runs if short-term funding dried up, as it did in the crisis.
1  Although the Federal Reserve supervises entities with a range of legal forms, including depository institutions and holding companies, for the purposes of my remarks today, “financial institutions,” “firms,” “banks,” and “banking organizations” are used interchangeably unless indicated otherwise. BIS central bankers’ speeches  1  Large financial institutions, of course, were not alone in failing to see these risks.