Everyone's A Lender Now: Shadow Banking USA

The author highlights the growth of "shadow banking," which encompasses non-bank financial institutions offering services similar to traditional banks, often operating outside regulatory oversight. This hidden financial system makes up a significant portion of the global economy. Shadow banking is expanding due to the incentives of credit-dependent economies, leverage, and speculation. A major concern is the difficulty in quantifying the amount of private credit existing outside official credit totals. This lack of transparency makes it impossible to determine the total systemic risk accurately, adding uncertainty to the financial stability. Various organizations, such as insurance companies and payment processors, are now offering loans, further blurring the lines between traditional and shadow banking. Payment plans offered by vendors also contribute to the shadow banking's expansion. The author discusses how risks in these systems can be masked, transferred, or hidden under complexity, highlighting the potential for unforeseen consequences. The article emphasizes that known risks are already present, but the true extent of the systemic risk remains unknown. A few related articles are also linked, shedding light on the scale, asymmetries, and risks of the expanding system. The author concludes by offering a book and encourages readers to support his work.