Bloomberg

Fed headed for a clash with hedge funds, other shadow banks

The Marriner S. Eccles Federal Reserve building in Washington, Photo: Andrew Harrer/Bloomberg.

The Federal Reserve and other central banks are heading for a collision with shadow lenders -- the firms with a sinister nickname that are increasingly dominating global finance.

Even as policymakers struggle to reopen their economies in the midst of the coronavirous pandemic, they've launched a review of what went wrong with markets in March, when a worldwide dash for cash by investors nearly crashed the financial system and forced unprecedented rescue actions by central banks. Their focus is on loosely regulated money market and hedge funds, mortgage originators and other entities...

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