Using the file attached:
- Explain the unique aspects of the shadow banking business model. What type of institutions comprise this industry? What is the funding profile of these types of institutions?
- Why does shadow banking exist? What gaps does it fill in the economy?
- What are the advantages of the shadow banking industry? What are the risks? How can they be mitigated?
- Should the shadow banking industry be more comprehensively regulated?
- GE Capital:
- a. In your view, is GE Capital a shadow bank? Should the market care about such a characterization?
- b. What does GE Capital’s historical ROE suggest about the profit potential for nonbank financial institutions vis-a-vis traditional commercial banks?
- c. Why did GE initiate the GE Capital Exit Plan? Was it successful?