The Senate Banking Committee is writing new law that covers “bank entities”… but it’s the shadow financial system that collapsed in the credit crisis… and needs attention… here’s one explanation of some of the connections between firms and their funding sources …
Reblog from Rortybomb ~~~
“… Trying to get a working definition and a coherent explanation for journalists and laypeople of shadow banks and overlapping business models is something I’ve been trying to do for a while. It’s important because you need to see that relationship in order to get what works and what doesn’t with the Volcker Rule, and how it needs to be expanded. With the way Volcker and the administration are selling the reform, it looks like their mental model of the financial markets stopped in the 1970s – and it’s incredibly important, for a narrative of what broke and how to fix it, to see the way financial markets and lending have changed over the past 30 years. Luckily, someone just sent me this guide, Through the Looking Glass (Steagall): Banks, Broker Dealers, and the Volcker Rule, by Raj Date and from the recently opened Cambridge Winter Center for Financial Institutions Policy. This guy gets it. And this guide has my new favorite illustration of the financial markets – a roadmap to the shadow banks…” ~~~