Financial Crisis Inquiry Commission
Preliminary Staff Report
SHADOW BANKING AND THE FINANCIAL CRISIS
MAY 4, 2010
This preliminary staff report is submitted to the Financial Crisis Inquiry Commission (FCIC) and the public for information, review, and comment. Comments can be submitted through the FCIC’s website, www.fcic.gov.
This document has not been approved by the Commission.
The report provides background factual information to the Commission on subject matters that are the focus of the FCIC’s public hearings on May 5 and 6, 2010. In particular, this report provides information on the shadow banking sector. Staff will provide investigative findings as well as additional information on these subject matters to the Commission over the course of the FCIC’s tenure.
The purpose of this preliminary staff report is to describe the nature and scope of the shadow banking system. Section II offers a definition of shadow banking and an overview of its role in the crisis. Section III describes the composition, characteristics, and evolution of the shadow banking system. Section IV explains why the key episodes of the financial crisis have been described as bank like “runs” on shadow banking markets and discusses the vulnerabilities that the crisis revealed in these markets.
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