Back in September 2019, when the Fed's aggressive tightening led to a sudden, catastrophic "repocalypse" when the lack of liquidity pushed overnight rates orders of magnitude higher and crushed levered Treasury cash-swap pair trades reliant on ultra-cheap funding (also known as basis trades ) there was a brief period of time when the world's largest multri-strat hedge funds such as Citadel, Millennium and Balyasny, who are exposed to hundreds of billions in basis trades, were on the verge of collapse. We described this in Dec 2019 in "The Fed Was Suddenly Facing Multiple LTCMs." 

Several months later, when the same hedge funds were hammered by the double whammy of the covid crash, things hit a breaking point and had it not been for the Fed stepping in with unlimited multi-trillion repo operations and unleashing a massive $100BN+ monthly QE, the financial system would surely collapsed, as not just we but later Bloomberg also admitted. We discussed this just as the world shut down due to covid, in "Fed Bailed Out Hedge Funds Facing Basis Trade Disaster" where we reminded readers that "hedge funds such as Millennium, Citadel and Point 72 are not only active in the repo market, they are also the most heavily leveraged multi-strat funds in the world, taking something like $20-$30 billion in net AUM and levering it up to $200 billion. They achieve said leverage using repo."

We also quoted Morgan Creek CEO Mark Yusko who (correctly) said that "too big to fail is back, and this time it’s not the banks, it’s levered financial institutions." Yusko, who may have forgotten that the original Fed bailout was not of a bank but of an extremely levered hedge fund (LTCM), said he supported the Fed’s stepping in, but added that hedge fund firms have gotten too big by borrowing too much. “It’s a bailout,” Yusko said, repeating what we said in December.