Reuters- The current brutal conditions in markets from mortgages to corporate loans should be giving banks good reason to think long and hard about their loans to hedge funds.

And if they do, watch out, because it would kick one more support from beneath a broad credit market that is already tottering. It would also deal a fresh blow to stock markets that are only now realizing the extent to which they too are addicted to cheap credit.

The business of lending to hedge funds, made by “prime desks” at banks, has been a glorious one in recent years, racking up massive profits for banks and allowing hedge funds to magnify their returns.

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