12Derivatives and Shadow Banking: A Misunderstanding

 

THE EXPRESSION “SHADOW BANKING SYSTEM” has become wide spread in recent years, and the system has served as a demonic whipping boy for those wishing to deflect blame for the crisis away from the real culprits. Surely those nefarious actors luring in the “shadows,” out of sight and beyond public scrutiny, played the major role in (nearly) collapsing the financial system. It is suggested that while sunlight and transparency characterized the safe, sound, and regulated banking system, darkness and shadows marked the side that was greedy, reckless, speculative, and unregulated. In fact, the dark side did contribute to the bubble and the subsequent crisis, but it’s also precisely the side that ...

Get The Financial Crisis and the Free Market Cure: Why Pure Capitalism is the World Economy's Only Hope now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.