Shadow Banking System Quotes

Financial regulatory reform is one of the top legislative priorities of the Obama Administration.

Bubbles are best identified by credit excesses, not valuation excesses. And there's no bigger credit excess than in China.

Prior to the 2008 recession, many financial institutions were engaging in 'proprietary lending,' where a bank would invest funds for its own gain instead of earning revenue through commission by trading on behalf of clients.

The financial crisis involved significant failures in the functioning, regulation, and supervision of OTC derivatives markets.

This crisis exposed very significant problems in the financial systems of the United States and some other major economies. Innovation got too far out in front of the knowledge of risk.

My old firm, Goldman Sachs - traditionally, the best banks are leveraged 8:1. When we had the financial crisis in 2008, the investment banks were leveraged 35:1. Those rules had specifically been changed by a guy named Hank Paulson. He was secretary of Treasury.

The problem with the focus on speculators, as was demonstrated during the financial crisis, is that it tends to divert attention from the real villains. During the financial crisis, the villains were the actions of the banks, not the speculators betting on bank share prices.

AIG's failure revealed systemic problems in the OTC derivatives market that went well beyond the failure of a single market participant.

If banks anticipate government will come to the rescue should the credit market go badly awry, they may make loans that would otherwise be imprudent, e.g. subprime loans with little prospect of repayment.

What the mortgage bubble was all about was big banks like Goldman Sachs taking big bundles of subprime mortgages that were lent out largely to low-income, highly risky borrowers, and applying this kind of magic-pixie-dust math to these bundles of securities and slapping AAA ratings on them.

America's economic illness has a name: financialization. It's an academic term for the trend by which Wall Street and its methods have come to reign supreme in America, permeating not just the financial industry but also much of American business.