Banking - Shadow and Real

by Richard Florida

Tyler Cowen points to a new NBER study that concludes that the shadow banking system is misnamed: it's part of the real banking system and at the heart of the financial crisis:

The 'shadow banking system' at the heart of the current credit crisis is, in fact, a real banking system - and is vulnerable to a banking panic. Indeed, the events starting in August 2007 are a banking panic.