Looks like the Nellie Liang description was cutoff–here it is in full:
“Staff at FSOC member agencies have been working to improve monitoring systems to identify potential emerging financial stability risks posed by highly-leveraged hedge funds. Work in this regard has been focused primarily on common, broad practices and activities, rather than on individual institutions. For example, based on a recent pilot data collection, a significant share of bilateral repo transactions collateralized by Treasury securities – a key source of hedge fund leverage – appear to be traded with zero haircuts.”
“The economy is adjusting to a rise in interest rates more significant than in decades and ongoing geopolitical risk. With such a transition of inflation and rates, it’s appropriate to stay alert to financial stability issues. As the Federal Reserve’s recent Financial Stability Report noted, areas of concern include “vulnerabilities related to valuation pressures, borrowing by businesses and households, financial-sector leverage, and funding risks.” It also noted that “hedge fund leverage remained elevated.”
Yellen back in April:
