The shadow banking system grew enormously in the decades before 2008 in the United States and is widely considered to have been crucial in the financial crisis of 2008. Since the growth of shadow...Show moreThe shadow banking system grew enormously in the decades before 2008 in the United States and is widely considered to have been crucial in the financial crisis of 2008. Since the growth of shadow banking was fostered by neoliberal policies, it constitutes a good case study to establish whether these policies have changed after the crisis. To what extent does neoliberalism still dominate government and monetary policy on shadow banking in the US after the crisis of 2008, and why is this so? I identify four main problems with shadow banking that arose when the crisis hit: a maturity mismatch, securitization, leverage and the size and interconnectedness of the financial system. I investigate the immediate response to the crisis, as well as longer term reform and regulatory efforts considering the four identified problems. I conclude neoliberalism is still dominant, but economic policies have most definitely changed during and after the crisis. In the proposed, implemented and ongoing reform agenda neoliberal economic fundamentals as financial innovation and market efficiency are not under scrutiny. Reform tries to limit the dangers from the most notorious excesses, but even now, not even ten years after the crisis, some of these excesses are already slowly returning.Show less
