The New York Times, June 11, 2019: Risky borrowing is making a comeback, but banks are on the sideline
A decade after reckless home lending nearly destroyed the financial system, the business of making risky loans is back.
This time the money is bypassing the traditional, and heavily regulated, banking system and flowing through a growing network of businesses that stepped in to provide loans to parts of the economy that banks abandoned after 2008.
It’s called shadow banking, and it is a key source of the credit that drives the American economy. With almost $15 trillion in assets, the shadow-banking sector in the United States is roughly the same size as the entire banking system of Britain, the world’s fifth-largest economy.