Shadow Banking
Shadow Bankers
Asset management firms
Bank holding companies
Banks, investment
Banks, traditional
Companies, public
Companies, private
Exchange-traded funds
Hedge funds
Insurance companies
Money market funds
Municipalities
Mutual funds
Pension plans
Private equity firms
Securities dealers
Securities lenders
Securitizing firms
Sovereign wealth funds
University endowments
Fannie Mae and Freddie Mac
Federal Home Loan Banks
Federal Reserve and other central banks
Five steps of shadow banking
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1. Make loans.
2. Make securities.
3. Sell securities.
4. Insure securities.
5. Keep securities to lend and repo.
Six shadow banking transactions
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1. Asset-backed securities - ABS
2. Collateralized debt obligations - CDO
3. Asset-backed commercial paper - ABCP
4, Credit default swaps - CDS
5. Securities lending - SecLend
6. Repurchase agreement - Repo
Steps of shadow banking
1. Make loans.
2. Make securities.
3. Sell securities.
4. Insure securities.
5. Keep securities to lend and repo.
Transactions of shadow banking
1. Asset-backed securities - ABS
2. Collateralized debt obligations - CDO
3. Asset-backed commercial paper - ABCP
4, Credit default swaps - CDS
5. Securities lending - SecLend
6. Repurchase agreement - Repo
Shadow bank lending
Aircraft leases
Auto loans
Auto leases
Commercial real estate
Computer leases
Consumer loans
Credit card receivables
Equipment leases
Equipment loans
Franchise loans
Healthcare receivables
Health club receivables
Home equity loans
Insurance receivables
Intellectual property cash flows
Manufactured housing loans
Mortgages, commercial
Mortgages, residential
Motorcycle loans
Music royalties
RV loans
Small business loans
Student loans
Trade receivables
Time share loans
Tax liens
Viatical settlements
From “Securitization” by Yale University professors Gary Gorton and Andrew Metrick.
Steps of shadow banking
Securitizing firms
-Conduit
-Special purpose entity - SPE
-Special purpose vehicle - SPV
-Structured investment vehicle - SIV
-Trust
-Variable interest entity - VIE
1. Make loans.
2. Make securities.
3. Sell securities.
4. Insure securities.
5. Keep securities to lend and repo.
Transactions of shadow banking
1. Asset-backed securities - ABS
2. Collateralized debt obligations - CDO
3. Asset-backed commercial paper - ABCP
4, Credit default swaps - CDS
5. Securities lending - SecLend
6. Repurchase agreement - Repo
“Quick. Take my security and give me money.”
To Recap
Shadow bankers
Shadow bank lending
Asset management firms
Bank holding companies
Banks, investment
Banks, traditional
Companies, public and private
Exchange-traded funds
Hedge funds
Insurance companies
Money market funds
Municipalities
Mutual funds
Pension plans
Private equity firms
Securities dealers
Securities lenders
Securitizing firms
Sovereign wealth funds
University endowments
Fannie Mae and Freddie Mac
Federal Home Loan Banks
Federal Reserve and other central banks
Aircraft leases
Auto loans
Auto leases
Commercial real estate
Computer leases
Consumer loans
Credit card receivables
Equipment leases
Equipment loans
Franchise loans
Healthcare receivables
Health club receivables
Home equity loans
Insurance receivables
Intellectual property cash flows
Manufactured housing loans
Mortgages, commercial
Mortgages, residential
Motorcycle loans
Music royalties
RV loans
Small business loans
Student loans
Trade receivables
Time share loans
Tax liens
Viatical settlements
Steps of shadow banking
1. Make loans.
2. Make securities.
3. Sell securities.
4. Insure securities.
5. Keep securities to lend and repo.
Securitizing firms
Transactions of shadow banking
-Conduit
-Special purpose entity - SPE
-Special purpose vehicle - SPV
-Structured investment vehicle - SIV
-Trust
-Variable interest entity - VIE
1. Asset-backed securities - ABS
2. Collateralized debt obligations - CDO
3. Asset-backed commercial paper - ABCP
4, Credit default swaps - CDS
5. Securities lending - SecLend
6. Repurchase agreement - Repo