THERE'S REASON TO WORRY WHEN EVERYONE FROM rating agencies to regulators starts talking about a corner of the capital markets that previously enjoyed peaceful obscurity — while the banks that arrange and manage the deals remain tight-lipped.

Such is the case for the U.S. repurchase, or repo, market, where banks and other financial institutions borrow cash from money market and pension funds by pledging securities as collateral. The tensions that led to the notorious repo squeeze of 2008 are resurfacing, experts fear. These include a hunger for yields far above the paltry returns offered by U.S. Treasuries and a growth in the supply of securities that meet this demand — but at higher risk.

In the wake of the Lehman Brothers Holdings collapse of September 2008, funds curtailed lending to banks through repo. They got especially stingy if the banks had put illiquid and hard-to-price assets such as residential-mortgage-based structured products up as collateral, says Bruce Tuckman, director of financial....