Among the areas the Fed flagged:Wild swings tested the financial system’s resilience. “While the financial regulatory reforms adopted since 2008 have substantially increased the resilience of the financial sector, the financial system nonetheless amplified the shock, and financial sector vulnerabilities are likely to be significant in the near term,” the report said. Speculation has been rampant that hedge funds contributed to the turmoil, and the Fed acknowledged that in its report. Some hedge funds buy and sell securities frequently to make small amounts of money that add up over a large number of trades. The Fed noted that stock prices had “swung widely,” and said other assets could be in for lower prices.

Source: New York Times May 15, 2020 20:03 UTC