Fintech Takes

S8 E2: Bank Nerd Corner: What Are Shadow Banks?

Jul 17, 2024

Assistant professor Todd Phillips discusses shadow banking, risks, Synapse bankruptcy, bank supervision challenges, regulator/bank dynamics, and CFPB efficiency in an engaging breakdown.

01:07:04

Episode guests

Todd Phillips

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Episode notes

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Quick takeaways

Shadow banking poses inherent risks for bank supervisors and consumers.

Bank supervision requires a delicate balance between safety and innovation.

CFPB criticized for lack of prioritization and focus in supervisory tasks.

Deep dives

Challenges in Bank Supervision and Regulation

Bank supervision involves a dynamic interaction between regulators and banks, where enforceable actions and legal interpretations play a crucial role. The process navigates the delicate balance of ensuring banks are safe while allowing them to innovate. The regulators and banks engage in a dance where decisions are made based on legal framework, enforcement mechanisms, and perceived risk.

Intro

2min

Discussion on FDIC leadership and banking regulations with a new guest

5min

Understanding Consumer Shadow Banks and the Need for Regulation

28min

Exploring the Dynamics of Bank Supervision and the 'Supervisory Dance'

3min

Enforcement Actions and Regulatory Compliance Challenges in Banking Supervision

16min

Interpretation of Laws and Regulations in the Banking Sector

3min

Challenges and Priorities of the Consumer Financial Protection Bureau

6min

What is shadow banking? It sounds nefarious… right? But what does it really mean?

Alex is joined by Kiah Haslett and special guest, Todd Phillips, the assistant professor at the Robinson College of Business at George State University, to break down the topic of shadow banking and to discuss the challenges it poses for bank supervisors, regulators, and consumers alike.

They unpack the inherent risks of shadow banking and explore the role shadow banking played in the downfall of Synapse. What weight does the term “FDIC insured” actually hold? And is there a way to prioritize consumer safety when it comes to shadow banking?

Then, Alex, Kiah, and Todd also chat about the push-pull dynamics of regulator/bank relationships and postulate on the correct balance between regulation and innovation. And later, Kiah has a bone to pick with the CFPB, and she’s determined to figure out a better way to organize their chore chart.

00:03:10 Who is Christy Goldsmith Romero?

00:08:00 Stabilizing Shadow Banks

00:26:37 Synapse Bankruptcy

00:38:41 Breaking Down Bank Supervision

01:04:59 Go Off, Kiah!

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Twitter: https://twitter.com/khaslett

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