What kind of banking risks are lurking in the shadows?
The nation’s biggest banks all passed their annual stress tests and bank stocks today took off. Earlier in the week, Federal Reserve Chair Janet Yellen offered additional reassurance about the financial sector, saying she doesn’t think there will be another massive financial crisis in her lifetime. But traditional banks are only part of the picture when it comes to the U.S. finance system. There’s still a whole lot of risk out there that regulators don’t have an easy way to test, or even see. It’s called shadow banking. Maybe you remember the term from back in 2008.
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