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Same question what is a shadow bank? And which banks aren't regulated at all?
Nonbank financial companies (NBFCs), also known as nonbank financial institutions (NBFIs), are entities that provide similar services to a bank but do not hold a banking license. Because of this, they are not regulated or overseen by federal and state authorities. There are many NBFCs. Investment banks, mortgage lenders, money market funds, insurance companies, hedge funds, private equity funds, and P2P lenders are all examples of NBFCs.
Since the Great Recession, NBFCs have proliferated in number and type, playing a key role in meeting the credit demand unmet by traditional banks. Their critics say that they pose a risk to the US economy; their proponents say they offer a valuable, alternative source of credit and funding.
49.2%
The shadow banking system's relative share of total global financial assets at the end of 2021, according to the Financial Stability Board (FSB).
Nonbank financial companies (NBFCs), also known as nonbank financial institutions (NBFIs), are entities that provide similar services to a bank but do not hold a banking license. Because of this, they are not regulated or overseen by federal and state authorities. There are many NBFCs. Investment banks, mortgage lenders, money market funds, insurance companies, hedge funds, private equity funds, and P2P lenders are all examples of NBFCs.
Since the Great Recession, NBFCs have proliferated in number and type, playing a key role in meeting the credit demand unmet by traditional banks. Their critics say that they pose a risk to the US economy; their proponents say they offer a valuable, alternative source of credit and funding.
49.2%
The shadow banking system's relative share of total global financial assets at the end of 2021, according to the Financial Stability Board (FSB).
OK. I feel better about the whole thing. I thought your claim was there are many insolvent banks open for business with no regulation.
Let's be logical about the current banking situation and the economy. There is currently no bank in the US that could withstand a run on it if other banks did not loan them money. This is partly the result of the 2018 rollback of the Dodd-Frank by Trump. The Fed and any administration have the responsibility to insure that banking is understood to be solvent even if it is not, the price we pay for living in a capitalist society with dysfunctional and political gridlock and paralysis, greedy bankers, and wall street. This makes the Fed the only game in town to keep the economy rolling hopefully without too many missteps.
My opinion only, and living the dream.
Just about all of the original Dodd-Frank rules and regs still apply to the big banks.
Watched it last night. I thought it was fairly well-balanced. While I did pause it briefly a few times, I was impressed that there were no commercial interruptions. So it is possible to have a YouTube video without commercial interruptions every 5 or 10 minutes.
Just about all of the original Dodd-Frank rules and regs still apply to the big banks.
i don’t believe the small banks are stress tested the same as the bigger banks. i remember reading something to that effect.
found it “ As the week got under way, tens of billions of dollars moved from regional banks (which are not required to perform stress-tests) into mega banks (such as Bank of America) which are subject to far greater government scrutiny.”
i don’t believe the small banks are stress tested the same as the bigger banks. i remember reading something to that effect.
found it “ As the week got under way, tens of billions of dollars moved from regional banks (which are not required to perform stress-tests) into mega banks (such as Bank of America) which are subject to far greater government scrutiny.”
This is correct. I've read and heard that SVB probably would have passed last year's stress test FWIIW.
IMO the fix tho. is not to stress test smaller banks but to back stop the value of longer term paper at face value. ......which as you know the .gov guarantees at face value at maturity anyway.
The Fed. introduced a facility last weekend or maybe Monday such that banks can borrow from The Fed. to cover such pinch points at very low rates.
Regardless of how this is handled going forward we can't risk a banking and economic blowout over accounting rules.
An ominous takeaway was Kashari's 180 degree turn from advocating interest policy to support jobs that he forcefully projected in the early interviews, to his final interview where he said the bar would was really high for the Fed to intervene to staunch the pain from rising interest rates. The SVB collapse obviously breached the bar. Will be interesting to see what the Fed does Wednesday regarding interest rates.
Here's another source of information about the SVB collapse from Bloomberg's OddLots podcast that I'm a fan of:
Watched it last night. I thought it was fairly well-balanced. While I did pause it briefly a few times, I was impressed that there were no commercial interruptions. So it is possible to have a YouTube video without commercial interruptions every 5 or 10 minutes.
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