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How Shadow Banks Rule the World
Spiegel.de ^ | By Martin Hesse and Anne Seith

Posted on 11/14/2012 9:13:21 AM PST by DeaconBenjamin

In the financial world, there is a narrow divide between heaven and hell. Frenchman Loïc Féry realized this when he was 33. He was a rising star in the banking world, managing the trade in complex loan packages for an investment bank. He was the bank's "global head of credit markets." But then one of his employees gambled away about $317 million, and Féry was without a job.

A number of investment bankers experienced a similarly precipitous fall in the turbulent years of the financial crisis. But, like Féry, many reappeared and became more successful than ever, in the world of the so-called shadow banks. These companies engage in business similar to that of ordinary banks, but without being subject to the same regulation.

Féry launched a hedge fund in London. These investment firms collect money from customers and speculate with a wide range of securities. Today Féry makes investments that are too risky for his former colleagues. He lends the money of his customers to companies whose creditworthiness doesn't qualify for bank loans, and he also buys especially risky loan packages from lenders. As a result, he achieves double-digit returns in the midst of a crisis.

But the Frenchman, who has become so successful that he was able to buy a first-division football club, FC Lorient, insists that companies like his make "a positive contribution to the real economy," because they manage risks professionally.

Within a few years, the volume of financial transactions in the world of shadow banks grew from $27 trillion to $60 trillion today. Now regulators finally want to clamp down and set up a regulatory framework that has so far been conspicuous by its absence for this sector.

(Excerpt) Read more at spiegel.de ...


TOPICS: Business/Economy; Foreign Affairs; Government
KEYWORDS:

1 posted on 11/14/2012 9:13:32 AM PST by DeaconBenjamin
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To: DeaconBenjamin

The country has tipped. It’s time to sell out and LEAVE...


2 posted on 11/14/2012 9:22:13 AM PST by Huebolt (United Socialist States of Amerika. Thank you I.N.S. (Immigration - National Suicide))
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To: DeaconBenjamin

There’s a template. same people, same money-making corporations, same nonprofit fronts, same theft – different country.


3 posted on 11/14/2012 12:06:00 PM PST by bronxville (Margaret Sanger - “We do not want word to go out that we want to exterminate the Negro population,)
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To: Huebolt

There’s nowhere to go...”it’s” everywhere.

BlackRock and all their affiliates using mostly greek mythology names - Petreus foe one - the Windsor International Bank and Trust Company, Limited is a biggie.


4 posted on 11/14/2012 12:12:26 PM PST by bronxville (Margaret Sanger - “We do not want word to go out that we want to exterminate the Negro population,)
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To: DeaconBenjamin

Isn’t this what got Michael Milken in trouble?

eta: somebody make a vampire squid ping list


5 posted on 11/14/2012 12:16:18 PM PST by ksen
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