link here to article
This article (via Manan Shukla) is on the rebirth of the Shadow Banking System. It consists of non-banks, which are not regulated, that do not depend on deposits as a source of liquidity. It is about the same size as the depository banking system and it is a source of competition for the Wall Street banks who are regulated and who are less able to take risk than they were before the crisis.
The failure of a single hedge fund (Long Term Capital)required a large bailout, orchestrated by the Fed but paid for by the big banks, because the enormous leverage that it employed was a systemic risk to the financial system. If they escape regulation as they grow larger, they will set the stage for our next crisis.
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