Shadow Banking Now Poses Top Risk to US Stability, Warns IMF!

• Shadow banking now poses top risk to US stability, warns IMF! 
  by Ambrose Evans-Pritchard, in Davos, http://www.telegraph.co.uk/ 
  Non-financial lending has reached $15 trillion since the crisis and is outside the control of authorities warns the Fund’s deputy chief
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  The US shadow banking nexus is coming back to haunt like some hydra-headed beast and now poses the biggest potential threat to the American financial system, the International Monetary Fund has warned.
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  Zhu Min, the IMF’s deputy chief, said regulators have successfully cleaned up much of the global banking system since the Lehman crisis, but the excesses have moved off books and are once again growing to disturbing proportions.
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  “The key risk has shifted to shadow banking,” he said, speaking at the World Economic Forum in Davos.
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  While the explosion of China’s shadow banking is well-known, Zhu Min said there has been a surge of lending by asset management funds and others non-bank players to US companies. This is outside normal control and is hard to track.
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  “Non-financial corporations have raised $1.3 trillion (£860bn) through shadow banking in the US alone,” he told the Telegraph.
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  The IMF estimates that contingent liabilities of these shadow forms of lending have reached $15 trillion in the US, using a “broad” measure of activities that captures new forms of risk. This is higher than in China. It is roughly 180pc of banking assets and is rising rapidly towards its pre-Lehman peak. It is particularly worrying since it was a “run” on the interlinked world of structured finance that caused the global crisis to metastasise in 2008.
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