Is Shadow Banking Really Banking?

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Letter Writer:

Richard Cohen, assistant professor of finance at the University of Alaska at Anchorage

Date Posted:

Oct. 26, 2011

Letter:

Excellent survey of securitization. However, if you didn't know that there had been a major financial and economic crisis, you'd never find out from this article. Will there be a sequel that picks up where this one leaves off, and explains the severity of the crisis and offers remedies? Last, maybe this isn't a contradiction, just a difference of opinion that isn't reconciled. 1. "Economist Gary Gorton argued in a book last year that deregulation and increased competition in banking rendered the traditional model of banking unprofitable." 2. "In summary, the shadow banking system can be viewed as a parallel system—one that is a complement to and not a substitute for traditional banking."