Editorial Board
Where Do Shadow Banks Get Their Money? Your Deposits
Regulators need to address the growing links between traditional banks and the nonbank financial institutions that are increasingly taking over their business.
Shall we put that into an opaque package of subprime business loans?
Source: Hulton Archive/Getty Images
Shadow banking is back. A constellation of less-regulated intermediaries — from insurers to private investment funds — is increasingly taking on the traditional business of banks, making trillions of dollars in risky loans and occupying a central role in the economy.
Will this end badly, as it did in the 2008 financial crisis? Not necessarily — if authorities act to address the growing dangers.