BIS working paper by Daryl Duffie:
Abstract: I explain the key failure mechanics of large dealer banks, and some policy implications. This is not a review of the financial crisis of 2007–2009. Systemic risk is considered only in passing. Both the financial crisis and the systemic importance of large dealer banks are nevertheless obvious and important motivations.
Download the paper here: http://www.bis.org/publ/work301.htm