A New York Fed paper shows how the shadow banking system remains larger than traditional banks...

|By:, SA News Editor

A New York Fed paper shows how the shadow banking system remains larger than traditional banks despite its contraction, and that the system's inherent weakness makes it vulnerable to future bank runs. But unsnarling it is problematic: Regulate it more tightly, and you probably need government backstops. Shut it down or restrict it, and you suck credit out of the system.