/biz/ - Business & Finance

>>18453766
>they would be selling loan instruments or bundled products of loans, again there is no relation to the equities markets.
Wilson is a well informed guy, I don't think he'd be citing this as a factor in the equity market crash if it had no relation to equities.

I've been doing a little reading on investopedia and wikipedia.

>These include investment banks, mortgage lenders, money market funds, insurance companies, hedge funds, private equity funds and payday lenders, all of which are a significant and growing source of credit in the economy.
>https://www.investopedia.com/terms/s/shadow-banking-system.asp

>Examples of important components of the shadow banking system include securitization vehicles, asset-backed commercial paper [ABCP] conduits, money market funds, markets for repurchase agreements, investment banks, and mortgage companies
>Bernanke

Investment banks? hedge funds?

>They were also highly leveraged. This meant that disruptions in credit markets would make them subject to rapid deleveraging, meaning they would have to pay off their debts by selling their long-term assets
Wikipedia
>Shadow institutions like SIVs and conduits, ... borrowed from investors in short-term, liquid markets ... On the other hand, they used the funds to lend to corporations or to invest in longer-term, less liquid (i.e. harder to sell) assets.

Who says they only have to invest their borrowed money in mortgage-backed securities or other loan instruments? Why would you think they wouldn't also have equity exposure in their "longer-term asses" that they would have to liquidate in a deleveraging event?