Word: nonbanker
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Dates: during 2000-2009
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...could make with the capital you had. In the late 1970s, a lot of very smart Wall Street types managed to create a shadow banking system to finance more aggressive, risky and profitable investments, including novel vehicles based on the bad home loans peddled mostly (although not exclusively) by nonbank mortgage firms. (The government-sponsored Fannie Mae and Freddie Mac bought into the high-risk innovations of the shadow banking system around 2005 by buying a bunch of now-toxic mortgage-backed securities...
...greatest disturbance in credit markets in a decade. At the root of the turmoil is aggressive lending to American home buyers who previously were unable to obtain credit. Financial engineers pooled these loans together and sold off pieces representing different presumed levels of risk. In the process, the nonbank financial institutions buying these "structured credit products" - hedge funds and other supposedly sophisticated players - replaced banks as the engines of credit creation in recent years. Unlike banks, however, these institutions lack deposit insurance and do not have direct access to central bank lender-of-last-resort safety nets. When the quantitative...