We are live at The Atlantic Business! An interview I did with Perry Mehrling about shadow banks has just been posted. Please do check it out, and maybe even read it twice – there is a lot to think about there. I’m very happy with how it turned out.
When I last talked about the Shadow Banks, I came up with a working definition: “Your local shadow bank took in money in the repo market as deposits, and used senior tranches of debt as the collateral, and had no market maker of last resort.” I felt I was onto some interesting stuff, but wanted to look further than the Gary Gorton paper that initiated this inquiry for me. Several very smart people lead me to Professor Perry Mehrling, an economist at Barnard College, Columbia University.
Mehrling has a fantastic paper, The Global Credit Crisis, and Policy Response, about the shadow banks and their role in the current crisis. It’s very accessible to a general reader with an interest in the subject matter and just a bit of background knowledge and by far the best explanation of this part of the crisis; I highly encourage you to read it before or after tackling the interview. He also has a video of him presenting the paper, as well as a webpage full of relevant papers and editorals. Check it out.