Hedge funds typically rely on their prime brokers for leverage, all of it in some cases. But there are times when an additional source of liquidity is necessary--this is one of those times. Prime brokers have lifted their margin requirements and that has created a need for more financing. But secondary sources also seem to be drying up. The Financial Times says banks are no longer willing to accept credit portfolios as collateral. Bank of America is said to be one bank that no longer will lend against such portfolios. It makes sense of course--for banks. For hedge funds, it is yet another challenge. Left with no other options, more may be forced to pare their holdings. Hopefully that doesn't happen all at once.  

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