The Structure And Risk Profile Of The Shadow Banking System

This article provides an in depth description of the very complex shadow banking system that is about equal in size to the traditional banking system.  It explains the securitization process that was at the center of the financial crisis.  It also explains the process by which collateral can be leveraged in the system.  Efforts are underway to reduce the risks inherent in the system while preserving some of the market needs that it satisfies.  The article contains useful graphics, that describe the system, but it is not for everyone.