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The shadow banking is fine. The taxpayer isn't responsible if a PE fund engaged in direct lending to the middle market loses all their money. But shadow bankin
by Despegar 7y ago
The shadow banking is fine. The taxpayer isn't responsible if a PE fund engaged in direct lending to the middle market loses all their money.
But shadow banking can and should be scrutinized, and potentially regulated, if there are systemic risks that will lead to the taxpayer being on the hook once again. If it's just isolated private actors losing money it doesn't matter.
- kgwgk 7y agoThe “private actors” are not always so private: CalPERS is doing a lot of PE, for example.
- Kyragem 7y agoCalPERS should really fire their 100 Goldman Sachs advisors and really do what NVPERS is doing (fund managed by 1 person who mainly invests in index funds).
- ericd 7y agoAnd I think this hits the nail on the head for where the problems are going to come from. Low interest rates have made it very hard for pension funds to keep up with their (overgenerous) past promises with safe assets, and a frothy stock market seems like it’s been keeping them solvent.
- nqzero 7y agothe article claims that the banks (the same ones that were bailed out in 2008) are the source of the capital that the shadow banks lending to companies so the taxpayer is on the line (at least, as much as they were in 2008)