The Federal Reserve is considering several options to relieve stress and decrease volatility in the repurchase, or repo, market. One of the most viable solutions involves lending cash to smaller banks, securities dealers and hedge funds through the Fixed Income Clearing Corp. (FICC) That being said, this solution would mean that the Fed would be lending directly to hedge funds, a move that could be perceived as a bailout and cause considerable political backlash. Still, as the Fed continues to weigh its options, this solution may be the best plan.

Read more via the Wall Street Journal.