hedge fund industry as we know it would not exist if it weren’t for one critical, but often ignored function – securities lending
Spooked by what they regard as new counter-party risks, and motivated by a sense of vigilante justice against short sellers, several major institutional investors have unilaterally curtailed their securities lending programs recently.
http://allaboutalpha.com/blog/2008/12/02/securities-lending-starting-to-dry-up-a-little/