By FS Staff
Shadow banking is back in the news. First there are ongoing problems in China where bad loans outside of the traditional banking system are causing increasing financial strain. Then, here in the U.S., regulators are also becoming more concerned about the rising use of leveraged loans by non-bank intermediaries or things like peer-to-peer lending, where the largest such company in this space, Lending Club, just filed for an IPO.
In order to gain a better understanding of these potential risks and how they come to pose a threat, shadow banking expert Laura Kodres from the IMF tells Financial Sense Newshour that forms of shadow banking are "definitely picking up." Although we're not yet back to the same levels reached in the last financial crisis, she warned "it's certainly in that upward direction."
Since shadow banking activities are also closely tied to low rates and the search
A new study from the Bank of England addresses the question: does quantitative easing actually increase bank lending? And, if so, by how much?
Those are important questions, but one of the many lines of thought to which they lead is this: are some banks actually too large to bother rescuing? Maybe the policy makers who worried about the too-big-to-fail thing had it all wrong. The smaller banks help them do what they (wise policy makers that they are) presumably want to do. The bigger banks are irrelevant.
The monetary levers don't work on really big rocks.
Let's take this by steps. I submit we'll reach a conclusion that will interest, for example, those alpha hunters looking at long or short positions in the equities of banks.
One of the regular arguments in favor of the policy of expanding the money supply by central bank purchase of bonds, in