The New York Times' DealBook writes "Shadow Banking Makes a Comeback". It says, "The shadow banking industry is back -- and it could become bigger than ever, according to a new report by Standard & Poor's. As traditional lenders and big investment banks face a wave of new rules stemming from the Dodd-Frank financial overhaul, their lightly-regulated brethren -- money market funds, private investment companies and hedge funds -- see an opportunity to profit, S.&P. said. These resurgent shadow-banking firms are aiming to 'bolster their balance sheets to take on business that the banks discontinue,' according to the report. While the shadow industry has benefits -- like providing cheap financing to companies -- it also comes with plenty of risk to investors and the broader economy.... This flexibility, S.&P. said, will also allow shadow firms to take on new lines of business that the banks are forced forgo."
