Essays | Shadow Banking

My first foray into financial journalism.

The financial news has been abuzz about JPMorgan Chase’s record $13 billion penalty agreement over the bank’s lending practices leading up to the 2008 financial crisis. And rightly so — it’s refreshing to see at least a little responsibility being taken for the train wreck of subprime mortgages, exotic securitizations and suddenly frozen cash flows. The official response to the financial crisis has often focused less on justice than on the simple goal of never letting this happen again, with bailouts trumping just deserts for the good of the system at large. By 2010, legislation like the Dodd-Frank Act and the international Third Basel Accord added new regulations for bank behavior, limiting the amount of risk they could take on and implementing stress tests to keep better checks on the institutions’ health.

But the new regulations go only so far — and, in some ways, might be making things even riskier.

Read more: Breaking the Banks | Fast forward | OZY

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