Abstract: While financial crises can be triggered by a number of causes, runs on short-term liabilities are at the heart of all financial crises with the recent 2007-2009 financial crisis being no exception. Given the unpredictability of crisis triggers and the overwhelming predictability of short-term funding’s role in financial crises, legislative and regulatory responses to the recent financial crisis should focus on controlling the problem of short-term funding in the financial system. However, in addressing the problem of short-term funding in the financial system, it is important to recognize the social benefits afforded by short-term liabilities and not simply the costs. To this end, this Article provides a brief overview of short-term funding in the U.S. financial system, while also highlighting the tradeoff between the costs and benefits of short-term liabilities. The Article proceeds with an analysis of various proposals aimed at addressing the short-term funding issue.