For the last quarter century, however, the near misses in our financial system have originated not from this classic pattern, but from outside the commercial banking system. The new market-based liquidity problems arose from sudden sharp movements in asset prices that led to enormous market uncertainty concerning the values of those assets.
As now liquidity-strained institutions made increasingly distressed asset sales, they placed further downward pressure on asset prices, leading to margin calls for leveraged actors and mark-to-market losses for all holders of the assets.