Great article in the FT 03/02/11. New to me, is the term "shadow banking", a practice apparently not new! A seemingly unregulated billion dollar business. The FT article picks up on this shadow banking, refering to "collateralised debt obligations" and "structured investment vehicles". Shadow banking previously refered to as "Russion doll financing" or "alphabet soup". I don't think anybody outside of the system would comprehend the complexities of what is going on, but it is worth (apparently) an eye watering $15,000bn, yes that's $15,000,000,000,000!!! It would seem that the regulators (like the rest of us - but then they shouldn't be...should they?) had assumed that banks are the only really important parts of the financial system. Some of these funds are said to have bigger loan books than Wall St banks.
For me at least this is raising the lid on another fascinating can of worms...is there no end...probably not!
What are the governance issues..........................
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