For example, nearly half of the liabilities of broker-dealers consist of shortterm wholesale funding, an amount that is nearly the same as it was during the crisis. 6 Numerous regulatory reforms have addressed the use of short-term wholesale funding by prudentially regulated institutions.
The relaxation partly reflected rising calls from the industry, which had faced severe business conditions in the early 2000s and was seeking to strengthen profitability through greater leverage. The increasingly sophisticated risk management of these institutions, as it was described at the time, was also cited as one rationale for this deregulation.