US shadow banking: the key concerns outlined

Author: Michael Washburn | Published: 23 Oct 2012

Knight Capital last week reported a quarterly loss of $389.9 million on bigger-than-estimated costs from the software error that nearly pushed it into bankruptcy. The colossal fallout has renewed concerns that the shadow-banking sector threatens the stability of the US financial system.Shadow-banking activity grew this year. Knight Capital’s Urban Financial Group reportedly issued $427 million in reverse mortgage-backed bonds in Q2 2012. While, private equity giant KKR lent $512 million to companies worldwide in the first half of the year. At the same time, the growth of the sector has sparked a regulatory and legal backlash,...