PowerPoint Presentation

Approaching RegulationL. Randall Wray, Levy Economics Institute and University of MissouriKansas Citywww.levy.org; wrayr@umkc.edu

Approaching RegulationTo Reform the System We must Understand:What is the nature of the financial system today?What is the nature of the crisis?What is the nature of the crisis response?What should a financial system do?How can we reform the system so thatIt serves a public purposeIt can be managedIt can be rescued

A Minsky Moment or a Minsky Half-Century?Stages ApproachCommercial capitalismFinance capitalismPaternalistic (Managerial-Welfare State) capitalismMoney Manager capitalism (predator state, financialization, ownership society, neoliberalism, neoconservativism, shadow banking)Stability bred instabilityAccumulation of financial assets/liabilitiesGlobalizationSecuritizationSelf-supervision3Decreasing Weight of the Banking Sector

56Bubbleonia: Boom and Bust1980s Thrift & Bank CrisesThrifts and Commercial real estateBanks and LDC debt1980s Leverage Buy-outsMichael Milken and Junk Bonds1990s New Economy and NasdaqIrrational Exuberance2000s Residential Real EstateSubprimes; foreclosures2000s Commodity MarketsQuadrupled oil prices; food riots; starvation

Each crisis worse than the previous

7No One Saw it ComingTwo Falsehoods: Unforeseeable and Unpreventable; Black Swans with Fat TailsReality: Financial Crisis Inquiry ReportA Man-made crisis: Captains of Finance & Public Stewards caused it and ignored warningsReality: Many economists saw it comingGodley&Wray; Baker; Minsky (in the 1950s!)Reality: Everyone saw it comingYBG-IBG: youll be gone, Ill be goneGoldman&PaulsonBetting on failure: It was Wall Streets desired outcomeLets name namesWidespread failures in regulation and supervisionTreasury, Fed, esp NYFed (Greenspan, Geithner, Rubin, Summers, Bernanke, Dodd, Gramm)Dramatic failures of corporate governance and risk managementTraders like Hank Paulson and Rubin rise to the topFannies Franklin Raines maxs CEO salaryExcessive borrowing, risky investments, lack of transparency Systemic breakdown in accountability and ethicsControl Fraud

Congressional Oversight Panel: All successful crisis resolutions required: Transparency. Swift action to ensure the integrity of bank accounting, to ascertain the value of bank assets and hence assess bank solvency Assertiveness. Willingness to (1) take early aggressive action to improve capital ratios of banks that can be rescued, and (2) shut down banks that are irreparably insolvent. Accountability. Willingness to hold management accountable by replacing and, in cases of criminal conduct, prosecuting failed managers. Clarity. Transparency in the government response with reporting of all forms of assistance being provided and clearly explained criteria for the use of public sector funds.

4 strikes and youre out?

10Policy ResponsePhase 1: Credit easePhase 2: Lets Make a Deal!Phase 3: Unaccountable $29T+ loan originationsPhase 4: Quantitative easing 1,2,3,(????) and Confidence Fairies11

12Total Institutional Participation, excluding CBLSPopular RevulsionSeptember NYTimes poll: Americans disapprove of the 2008 financial bailout by a 24-point margin, and believe that not enough "bankers and employees of financial institutions" were prosecuted by a staggering 70-point margin.

Another poll asked more directly about financial regulation, and found a 50-point advantage favoring tougher regulation of financial institutions.Lessons from the Global CrisisDiscredited Notions: Efficient Markets, Deregulation, Self regulation, Max Shareholder Value, Great ModerationNew Classical, Real Business Cycle, Rational Expectations, Neutral MoneyNew Monetary Consensus, Inflation Targets, Taylor Rule, Quantitative EasingRicardian Equivalents, Impotent Fiscal Policy, Crowding Out, Optimal Currency Area

Crisis represents: An institutional failure (banks mutated from utilities to casinos); An intellectual failure (dangerous view of efficacy of mkts); And moral failure (system built on money values)15Revised View of FinanceSavings Dont Finance NothingSaving = Accounting Record of InvestmentConventional View Confuses Paying For with FinanceThe Finance Is Created Simultaneously with the Spending (System of Credits and Debits)Financialization Is Not Finance; It is Leverage or LayeringFinancialized Homes, Education, Health Care, Retirement, DeathFinance is Not a Scarce ResourceWall St Became the Tail that Wags the Dog

Reconstituting the Financial SystemMinsky Project: Reconstituting Finance to Promote Capital Development of the Economy Requires Proper Framework1. a capitalist economy is a financial system;2. neoclassical economics is not useful because it denies that the financial system matters;3. the financial structure has become much more fragile;4. this fragility makes it likely that stagnation or even a deep depression is possible;5.a stagnant capitalist economy will not promote capital development;6.however, this can be avoided by apt reform of the financial structure in conjunction with apt use of fiscal powers of the government.

17What Should a Financial System Do?: Key Elements to Promote Capital Development1. safe and sound payments system;

2. short term loans to households and firms, and, possibly, to state and local government;

3. safe and sound housing finance system;

4. a range of financial services including insurance, brokerage, and retirement savings services; and

5. long term funding of positions in expensive capital assets.

NB: there is no reason why these should be consolidated, nor why all should be privately supplied18Minskys Wall St view of moneyVast majority of monetary transactions have little to do with circulating or producing outputMany are related to financing positions in assets: M now for more M later; issuing an IOU to get IOUs later-The M now is usually collateralized borrowing: other peoples moneyOr: changing characteristics of income and outgo streams: r and x swapsMany are hedges and bets on contingent outcomesNeed to redirect finance toward capital development of the economyThe Big 4: Banks or Shadow?

Can we put the Genie back in the bottle? Glass SteagallSection 16 accorded regulated banks all such incidental powers necessary to carry on the business of banking (FRB 1933, 396)undermined separationLiquidity creation was increasingly transferred from deposit taking by commercial banks subject to prudential regulation, to securitized structures that were exempt from reporting and regulation because they were considered capital market activities and (usually) exempt from even SEC oversight.Kregel: If we re-segment, commercial banks must be profitableMorgan Ricks: term out to eliminate competition from MMMFA Modest Proposal1. Banks lend directly to borrowers, and then service and hold them. There is no further public purpose served by selling loans or other assets to third parties, but there are substantial costs to government from regulation and supervision of those activities. 2. US banks cannot contract in LIBOR, an interest rate set externally with a large, subjective component and subject to manipulation. If not for indexing to LIBOR, the rates paid by US borrowers, including homeowners and businesses, would have come down as the Fed intended when it cut the fed funds rate.3. Banks cannot have subsidiaries of any kind. No public purpose is served by allowing banks to hold assets 'off balance sheet.'4. Banks should not be allowed to accept financial assets as collateral for loans. No public purpose is served by financial leverage.

Modest Proposal cont5. US Banks cannot lend off-shore. No national public purpose is served by allowing US banks to lend for foreign purposes.6. Banks cannot buy (or sell) credit default insurance. The public purpose of banking as a public/private partnership is to underwrite and price risk. If a bank relies on credit default insurance it is transferring that pricing of risk to a third party, which is counter to the public purpose of banking.7. Banks cannot engage in proprietary trading or any profit making ventures beyond basic lending. If the public sector wants to venture out of banking for some presumed public purpose it can be done through other outlets.8. Use FDIC-approved credit models for evaluation of bank assets. Do not allow mark to market of bank assets. If there is a valid argument for marking a bank asset to market prices, that asset should not be a bank asset in the first place. The public purpose of banking is to facilitate loans based on credit analysis rather, than market valuation. Conclusions for Reform: Govt RoleReducing concentration plus retaining risk can reorient banks back to relationship bankingRole for govt to play in re-regulating and re-supervisingThere are no magic formulas (capital ratios, living wills, skin in the game)Role for govt in direct provision of financial servicesPayments systemDirect lending to serve public purposeGuarantees for public-private partnerships

24Chart159.8048894276010.65568649010.14954034051.08385505830.9601406262001.801565383302.091898579205.146853612918.305570481856.345435894012.08546347370.18078164941.2074532490.9921969595002.119349522401.438685591305.677384636119.953249024655.1724413252012.49745499840.20878993661.28028551921.0088186801002.285910471801.049937921906.176269806120.320091340653.2202987997012.79401024040.24243536651.39381216231.09325349030.001529560702.612107237501.191145373306.603495810920.847911958551.2470727903013.06250384560.27362850951.5132814791.02212554340.002533597302.87490906201.32109002607.549034156521.133820990550.3319044868013.20160174150.31477176531.6309678981.11026753920.010749942903.245474945901.356844354307.768177481621.029239844750.0056468817013.3746392270.37551763081.76151336431.16608106410.013489772903.168528046201.17957083708.051198393820.903814782348.4577803181013.73162878730.43513601231.90770521041.09832350570.0152225803.587358939801.19166951490.01895642039.028138795520.528079915746.5666443258014.47120858530.51518503862.14418182751.09685424890.016150001203.83616362101.22497759190.02099500169.512889046820.594750711345.1152585008015.02005193980.57919589622.33605716841.10131233340.019273583603.733144880501.38250897580.019026486410.385743478520.308426756742.6741378566015.70244555030.64801291942.46008690141.24582925440.026347528404.447281094101.34236114740.020669181811.478891314219.95393725241.5021420654016.33019905590.73634834562.58310400471.3896675840.031884889104.378287460501.14079425470.023111194811.941639953319.942821192140.495356414016.90334281390.82302439662.79852638671.57788606280.035095691504.357748844701.11109307860.024952428111.953633114119.91934076939.6713922882017.20748095130.87000692682.88284460861.50154698680.035095820804.002955437501.12140383280.021426922213.426368044319.259478180637.7691432904017.69832517750.93889999313.02536356741.79509270110.034978289304.404335240201.06330553450.026190640314.2907850318.953580536236.8594897649018.04430794390.98995079223.17589091551.86931683740.032354489304.681903860501.07848297690.028491266714.597991446218.641819706636.1045210598018.30830902621.0162908023.25772133671.86193139160.042443020204.532329141201.11932489250.025465812115.757922575117.973740942436.4866115037018.97136731091.05314856183.33562801181.95528370120.05618787704.592848766201.14702177040.039317909114.787343170517.575241417435.5181074092019.490899431.07138556353.39776958131.96946240780.065176989704.822848942101.13805231290.03798887415.504798888616.983509600935.2758285848019.61727204641.1046286993.47126934291.88180053680.070703488404.92035093401.11743237560.031839231116.085950061116.422924699735.3212541032019.34906562591.11835405413.52327534961.95187262530.089844658705.05539042101.0699682080.051280725816.52686810215.942826126335.5938602263018.99150500551.15378166013.73767990452.34443412630.128851699904.976087909401.1067125460.07521252215.977904973315.913969426635.8560976065018.57756746591.14610479973.79165966472.12140530760.176761547104.60202422201.30979595070.07308752116.994893654115.350602260736.1141528284017.94055937851.14452789233.87425191232.18648853940.203683067204.64624782890.06692674021.49278884530.082408588617.486425160614.761539218335.80501699550.66045080817.79449687621.19640720844.04451111832.75657507450.243367957305.09416835990.15244678221.1698980270.120392700516.431894570914.530373521236.05241163361.026023880417.60865822231.23117289054.20356804533.24829722140.331458900104.93242908840.27213786461.13246714860.097520715315.857258671114.006595718435.60051667941.166653737418.03686450961.27298182884.24647430332.91038518230.585881944404.85790700510.39218873331.08421406490.080161653216.516440527113.249329831335.30527065691.471072910518.14122704591.28461312794.29070475092.72943684570.766923674504.81739240630.62242000521.221146520.062454975716.915341827812.371995252836.74755241721.956472389518.07183118321.31577803434.08880366693.38285653570.871325003305.02712023220.80225655790.98019232910.080708651914.853772924211.821330074737.95895195322.078744305818.1375323031.3857689813.97777283244.00529564310.974561837804.88093886390.74575008740.82881810870.063856554413.37981024711.582198282336.06080817082.336531797718.47175305481.4727793724.23735753693.80450349111.161624783504.33929662030.29620189320.87540493490.054636415215.494333254411.394768675334.93543594522.41296033318.92499857181.54377354494.33756482883.56043826491.480714110804.27810775120.16810997451.24230360150.05214320215.744081309911.319368561534.71152410242.457949407519.49874073531.64089953894.25921365013.44544981011.848082016704.56627838390.11257088140.97448642790.059376259715.368235295311.057193490834.52521131232.382935300219.06713291341.61873318184.30234048753.80570108081.992415424904.76980409770.09281921670.92026857580.082009173815.734102374510.706526860633.78578159822.347761484318.28624779991.54227975094.18043249554.12949934432.362869408704.99788090170.0827694870.81480576590.073619968416.943263012510.452788982732.68917116152.275584719717.48097704451.49178887374.32029735184.3050529552.514090036404.70028214270.0712581791.00065897270.351878623718.558563964610.240395974932.13752930882.267688990616.45509431421.40670135744.39449739824.61868335422.560826224104.72023411270.06313419591.18640669140.520003414819.593042532210.076158105530.70774735132.380985742715.43620720881.43748460244.57834393964.51917447243.166329167804.44288913720.05991440651.4770195970.698416099321.029247205110.066241069829.57825981272.438563309315.84481166471.50880593614.70111439954.01767702713.83422524550.05724547614.32752306110.05469253151.41685294291.1778002221.13271177229.909716601229.33434514552.569670203716.26562992681.52730052274.77746221464.10481576363.98438272310.29420957674.25981384510.10412253261.63251226080.833655843920.69933060749.612748833527.58174820612.542607255914.78936275661.56378188354.6612068873.75807644624.26750043620.43124649664.21248965210.12043904681.80990351881.570104295423.45633382719.235199291726.52299649342.48751531913.9254977911.65381356654.82189844063.50559702085.37921747250.75612880434.28885510690.15144230941.86783233191.480979499623.99108872419.167137120125.66834230012.42069420813.92007418031.6538603984.92085109883.46380209596.19323566221.09459528764.3511617560.2164506231.27629538531.702794244823.81712741449.300715345525.12666985292.380923988613.95702909111.64100806255.07951985323.5895412886.34360658891.31404233864.42308513520.24226650181.15647505891.849568512723.32045957939.575804148324.88319182582.334316897411.62114188331.55358757255.37104628393.4949892096.69040659541.61441722874.37494950740.23582455881.82011933571.789350578424.63345631099.583202212824.76149333342.21440955629.81667924241.61187866085.41547096633.54388779997.56724045941.98630777944.42309838930.21124382231.94499391911.862826230724.612954869110.027514971623.61136024832.0735770847.85278898381.64599539415.84225375733.40795049257.93246000892.20154704764.25278408920.1988448972.28071461581.921620897526.630304549410.147797934423.3071726692.18571719486.76214467191.68789141475.97579049943.525145238.11151532142.44661516923.92872278050.17921830112.43420603162.159910524627.176139011210.119811180622.53005874022.24559244635.90580306291.63083832186.03213699513.65669088837.85435243872.69861852863.57638550830.17343924332.771658681.941390665328.823987105810.159047375322.57359109712.24738204475.47366149821.5932751385.92468344324.24541615327.99036188932.9094662623.45205904970.16831582642.46766977822.030887603928.813817874110.109412341921.5367300652.23697432634.85358218011.48882574366.35989555544.30096055937.5276418643.17690697143.38056671240.15970822832.72261194381.839896299230.52594783069.889751720720.39064313722.21125895464.46598830851.42901686816.53318717374.28205943037.40974210523.3430217523.28090695820.1653667322.75467357662.116114968831.89415230499.723867729619.7059772672.1908668623.91722353481.34746265466.83392374554.19191731866.95491056843.4559350913.04401246990.24490977552.96733416712.307192436233.26144068089.576893428518.82790245482.29448144843.64123015461.30951375026.79251364874.70228842136.75346737093.89282994572.87511127460.23658906783.08135108522.509918692933.81872955659.264073128317.6546661942.18607579193.39333046141.22264782056.85981385795.08247697156.76477208563.8949075672.99876066390.20120611292.9524564473.131035167734.60901170799.048839150918.61211111832.34111149433.3860119061.22649618176.37648653775.46418500516.93309900554.16265851063.37281027490.18052935073.39637994843.258415603932.5701938728.71951119118.89666786282.50658579773.43475447251.34449353145.86906836696.14232583027.53176605044.66642593683.46833695540.20155660293.89819901313.090219843130.37313901198.576460725120.09020230422.69003805853.53867271981.47902820515.06228682466.68515776878.28275514445.17451006913.79073368980.2636365163.50184982832.838999494927.85674311068.745386265919.1487011192.69184445353.42189948661.44079454995.4838637536.52309753627.76585808985.15861823033.9205077430.31486457663.76539348472.482302010129.07514853268.807106434819.18235174053.03680544863.50561716691.39138675495.47764868746.12655263577.17159093275.63432750153.94842894920.53409059063.92065961332.29846477228.99464225028.777432956619.21830686322.98601172873.50654179661.34363482965.33291699515.5249518916.94076343496.62766127193.63885316580.59817784454.1682091652.437790862229.15054093958.52563921218.93953922172.97898099673.01323431481.25844617675.46196743795.0482871946.74296952487.34702896133.32339090860.6045128044.8179009582.321577781429.90905088328.233112837118.85786279752.90672119072.90948358971.21617052135.15593787985.08847936557.15533475927.24124613723.06369957890.50764852454.95671075362.625408557830.38053929677.934757047723.31132281873.42480821722.53740576271.3531279593.87579479815.64091810218.26227302326.81594816593.08397175270.42291775433.6927386824.567013259925.49115957887.5206001253

Source: Federal Reserve Flow of Funds AccountsManaged MoneyCommercial BankingCommercial BankingBank Holding CompaniesSaving InstitutionsCredit UnionsState and Local Government Retirement FundsGovernment-Sponsored EnterprisesAgency and GSE-backed Mortgage PoolsIssuers of Asset-Backed SecuritiesFinance CompaniesReal Estate Investment TrustsSecurity Brokers and DealersFunding CorporationsManaged Moneylife insurance companiesShares of Financial Institutions (% of Total Assets)

Sheet1Multiplier:Descriptions:19451946194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720081000000commercial banking total financial assets143573134021138202139178141589149826159398168714173003182581187881193942199617214771219197228987246691268189286098311330341636362978403266447874471382517196578230663087760825835784885079960096106690012200351355195148173916187321731316188850821276182377582262108527743552952040323405633371853442348365502938918564159695449389247103975174604562865759856456693187.97104745.67661338.88202939.69026351.69807161.310778014.411763640.7139965141000000bank holding companies total financial assets00000000000000000000000086951471918949276294050745770573486631375548842079417210314811422113424115569718637821917624582426164027972630339029844330231134276438790541413146677151081857530168594274116884189894242310258381153135142898415237711695263181322920563131000000savings institutions total financial assets25581287463130533458360903929842633478095376360786691337631283323931571027141120991250951394461569991731341871491936712089382224922342692526082929583407203741613993544533725200975993176737857334877923808288258703001011657117974512748621376161150454716397601510394132302511448741060439102017210086461012757103167810286261088556.51150476.11217659.51291394.71349462.31465876.71649585.71789399.11714755.71814952.21523501.51000000credit unions total financial assets35943052363475693711971515191423442853344140574710544961506944774186309749108171176612890141941575117662206762412727242305123614842426504355720261863676207085481046963341107751348001634351787571927962019192172382399732646952817122935973106613301143538313914834145274410665055015640236172096547246856617161507586548124411000000property-casualty insurance companies total financial assets asset633872068257935510588118301289014336156941786719564202462062523201250952640129373304673268834998367833752241297453134615550662584506886571257700848028197861118341139800161672182096194449212342235196250927298589353597405002453924503049533470575772597905642475678079740320769964843469876428869869858119854745.99346811059262115914712463171335790138151313055331000000life insurance companies total financial assets asset4394647460509005452058390625996663371472765138218887851931949819010426610999911581112280912918413680214494215420316228717264518306719129620093421519823236524475025501827967431107933985637834241927646417850752556753963271469721279608690592510052651125026124552413514401479468158698817548801862888206361322462892514802276952230679223135664322456733350273772797413026543506604685257494974645154961000000private pension funds total financial assets asset (form 5500 data)3802400145024999549959507093106651270214954196352261225185312643647940898493385121559698699648021683288979841113901140001238681465921814551797871780292443312753032972693513074130885129855392166690288150538761961226778128573013539581407190163176316291421931028203838122854222436213289884432244223712865414391545938154467538404941836753054519836492237253021746009967639118546002811000000state and local government employee retirement funds total financial assets26022872320736454181485556156642796694541083112071137951560717558197302225924518273693063634078381164264448047532476030368972805868465587583104002119205130912152034167683195831221346258129300156346509401802476515531868.7596774.1698072.2729860.285175493712310419951091757132706715092171794524203064223257542293078220664519304882349183257753527214043108268321630323270931000000money market mutual funds total financial assets asset0000000000000000000000000000023793696368638871080845214764151863052199281794672322042424082905813137763350204247364933195349675394715596496001277412948866531042527132791515795931812133224058322238902016368187984920068632312139303306237572591000000mutual funds total financial assets asset12451297141215153070334434813932414661107839904687141324215818170262287521271252152911635220348294430851232475884681255446589264663535152430344651045491460505178961809598427685211212113561024591142649448018550052558956160835576948599253713753861477349185275223423692989385361314345384944433065413536536383754654181543625960488537068292782898454352861000000closed-end funds total financial assets asset9711000130014001700200022002500280031003500390044004980554663646083573972907890763373007549892585876141777584509855895489529319737380397855792070687488744163848280144722134643176524895288071234934661161411178301363881443891458951488081520821418641395431508352055942459472714042942993168072069661000000government-sponsored enterprises total financial assets asset230523602527285928243305371738244075445754856494777881291041811613127221437215864166081887923908238592711636291465994727151263700398818993378978481059001344841656401951402326382547932565202977223239513464343743844217224542424776214968525528136316597823148974469891891100758140576317231651965001230938425493652794371288288028194002872853317422233869031000000agency-and GSE-backed mortgage pools total mortgages (total financial assets and net increase in pool securities) asset0004732435360781161491731902032012904135256248691314198825263204475595161440418040214582851140693568037040794778113959128986178519244807288987367864531591669394745287869548.810198611156489.41272047.21356765.61472405157073117117081826294201896922935312493244283178431586043326746337462835418933837254446353849608091000000issuers of asset-backed securities total financial assets asset000000000000000000000000000000000000003655213393717474723118309154382209825267701320968383678466161536135662899772264907496116377313205311496953175447719732842209854265126133821164181009451713040924111000000finance companies total financial assets asset4325504157266831794396611010012490142521510819580204602148121671255612908630968337593884843425488975074551758576216706670759789039047810408210746910650411757114035016855320047221305523775325049227630330896436312242383847029451965256861059611562002261610261778763612070539575791579932985952310167011212912130402114455851679471185795318569181891258191115318516691000000real estate investment trusts total financial assets asset00000000000000000000000830200739046370116901661016420727046203460328033203230318033783492755210382149662339528463306502847028990281052996031016333253820164311707296821764921757811005371348822513193052523440133166742539271000000security brokers and dealers total financial assets asset502234222630311536504039376041494551559559105331547760716171670076488431916798621034911286147311851315402162461761022935202941824921486341412995232520326834535859758832759046311840615601618458513794813587023656026213333251038173247877845472456810563635177919492117910010021221388146564013354201613023184488621270502741746309202422171831000000funding corporations total financial assets asset0000000667877911081231161521771742893062814967678221022158513991302117316711406134114331825289829531595026192393777520060465135345146355184046217299232561251059280157338717335357374237383916488839605847750347.61061547.411717741161857108264410633711081554.11244012.21321151.41637744.62742112.3Managed Money12356135041547117269208572312425664314333534242031505385580458924726878293890689107669108692124891141968159852162939191138216860216330227483268263317696307534294598380294432679472361556004679618841225986880118563813492781501321202196623708742574267273983532015983317166388248642617604979073530959863695987367797873414110110209117338531171271911419654.910623086124552411364357414875611170204871895155115305325total finance total financial assets asset2924112902393047983191073304693539473786194104244342684666395035265320425581176072286472076879177522568067378804649621441050472110873412197341340526141371515335001730238198148421722912307707256386128630003194279366593541518834680574519174957973066546539741712288162451011325211065701.712040667.11331247613861545.215023581.416147258.217778890.61897718321413413236933692688354730507775.134667594.436617743.338281093.238858253.143591032.347718375.451757534.657684280.663322944.662005867.924006923785625049126151327628729767631876034816737151740469944026946730649293854137558036062124368326973503480549988255996722510197771124679124016213165251434567162421818781532070410220181024544072748201307361935337514011140453281350368905638043638478472529938620128988231110808469.711748632.11299695013477317.214579202.415681992.217274060.61842726320866176231007772625905829895295.133904039.535961465.437597875.238134702.142838099.347055500.451030308.656907479.562380561.560041697.85.14685361295.67738463616.17626980616.60349581097.54903415657.76817748168.05119839389.02813879559.512889046810.385743478511.478891314211.941639953311.953633114113.426368044314.2907850314.597991446215.757922575114.787343170515.504798888616.085950061116.52686810215.977904973316.994893654117.486425160616.431894570915.857258671116.516440527116.915341827814.853772924213.37981024715.494333254415.744081309915.368235295315.734102374516.943263012518.558563964619.593042532221.029247205121.132711772220.699330607423.456333827123.991088724123.817127414423.320459579324.633456310924.612954869126.630304549427.176139011228.823987105828.813817874130.525947830631.894152304933.261440680833.818729556534.609011707932.57019387230.373139011927.856743110629.075148532628.994642250229.150540939529.909050883230.380539296725.4911595788commercial banking59.8056.3555.1753.2251.2550.3350.0148.4646.5745.1242.6741.5040.5039.6737.7736.8636.1036.4935.5235.2835.3235.5935.8636.1135.8136.0535.6035.3136.7537.9636.0634.9434.7134.5333.7932.6932.1430.7129.5829.3327.5826.5225.6725.1324.8824.7623.6123.3122.5322.5721.5420.3919.7118.8317.6518.6118.9020.0919.1519.1819.2218.9418.8623.31bank holding companies0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.661.031.171.471.962.082.342.412.462.382.352.282.272.382.442.572.542.492.422.382.332.212.072.192.252.252.242.212.192.292.192.342.512.692.693.042.992.982.913.42savings institutions10.6612.0912.5012.7913.0613.2013.3713.7314.4715.0215.7016.3316.9017.2117.7018.0418.3118.9719.4919.6219.3518.9918.5817.9417.7917.6118.0418.1418.0718.1418.4718.9219.5019.0718.2917.4816.4615.4415.8416.2714.7913.9313.9213.9611.629.827.856.765.915.474.854.473.923.643.393.393.433.543.423.513.513.012.912.54credit unions0.150.180.210.240.270.310.380.440.520.580.650.740.820.870.940.991.021.051.071.101.121.151.151.141.201.231.271.281.321.391.471.541.641.621.541.491.411.441.511.531.561.651.651.641.551.611.651.691.631.591.491.431.351.311.221.231.341.481.441.391.341.261.221.35property-casualty insurance companies2.643.033.303.583.833.974.044.124.224.414.444.334.184.294.324.254.304.144.063.973.803.683.673.653.513.533.603.673.443.183.273.563.853.964.034.023.863.773.683.463.463.583.753.863.873.963.953.813.723.683.553.333.212.932.572.392.272.452.472.462.442.352.212.17life insurance companies18.3119.9520.3220.8521.1321.0320.9020.5320.5920.3119.9519.9419.9219.2618.9518.6417.9717.5816.9816.4215.9415.9115.3514.7614.5314.0113.2512.3711.8211.5811.3911.3211.0610.7110.4510.2410.0810.079.919.619.249.179.309.589.5810.0310.1510.1210.1610.119.899.729.589.269.058.728.588.758.818.788.538.237.937.52private pension funds1.581.681.801.911.992.002.233.063.423.704.464.845.115.776.296.587.226.977.417.938.298.178.718.988.668.639.039.668.688.099.9510.029.679.9410.3011.3210.7111.8712.7712.0814.2313.0112.5311.9812.5512.0913.2513.0013.2313.2213.8913.9614.1413.8613.5512.4210.779.6410.5510.4610.3910.5610.257.66state and local government employee retirement funds1.081.211.281.391.511.631.761.912.142.342.462.582.802.883.033.183.263.343.403.473.523.743.793.874.044.204.254.294.093.984.244.344.264.304.184.324.394.584.704.784.664.824.925.085.375.425.845.986.035.926.366.536.836.796.866.385.875.065.485.485.335.465.163.88money market mutual funds0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.110.150.130.130.311.131.693.703.902.813.202.812.942.902.853.273.663.673.443.243.263.553.843.974.444.665.045.965.834.713.993.934.064.866.26mutual funds0.520.550.560.581.111.121.091.131.121.511.781.941.772.452.732.743.352.893.133.303.643.423.944.133.613.263.413.142.251.601.751.691.481.301.291.361.191.361.761.872.854.324.444.264.544.515.286.337.968.028.8810.1411.3812.0913.3912.3311.009.5410.8611.5511.8512.4212.559.05closed-end funds0.400.420.520.540.620.670.690.720.750.770.790.830.890.920.961.020.890.780.910.890.790.720.670.720.650.430.480.450.480.410.360.340.240.230.200.170.140.130.120.090.100.150.200.370.400.390.490.600.670.640.650.630.560.500.450.390.370.400.480.520.530.520.510.34government-sponsored enterprises0.960.991.011.091.021.111.171.101.101.101.251.391.581.501.801.871.861.961.971.881.952.342.122.192.763.252.912.733.384.013.803.563.453.814.134.314.624.524.024.103.763.513.463.593.493.543.413.533.664.254.304.284.194.705.085.466.146.696.526.135.525.055.095.64agency-and GSE-backed mortgage pools total mortgages0.000.000.000.000.000.010.010.020.020.020.030.030.040.040.030.030.040.060.070.070.090.130.180.200.240.330.590.770.870.971.161.481.851.992.362.512.563.173.833.984.275.386.196.346.697.577.938.117.857.997.537.416.956.756.766.937.538.287.777.176.946.747.168.26issuers of asset-backed securities0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.060.290.430.761.091.311.611.992.202.452.702.913.183.343.463.893.894.164.675.175.165.636.637.357.246.82finance companies1.802.122.292.612.873.253.173.593.843.734.454.384.364.004.404.684.534.594.824.925.064.984.604.655.094.934.864.825.034.884.344.284.574.775.004.704.724.444.334.264.214.294.354.424.374.424.253.933.583.453.383.283.042.883.003.373.473.793.923.953.643.323.063.08real estate investment trusts0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.000.070.150.270.390.620.800.750.300.170.110.090.080.070.060.060.050.100.120.150.220.240.240.210.200.180.170.170.160.170.240.240.200.180.200.260.310.530.600.600.510.42security brokers and dealers2.091.441.051.191.321.361.181.191.221.381.341.141.111.121.061.081.121.151.141.121.071.111.311.491.171.131.081.220.980.830.881.240.970.920.811.001.191.481.421.631.811.871.281.161.821.942.282.432.772.472.722.752.973.082.953.403.903.503.773.924.174.824.963.69funding corporations0.000.000.000.000.000.000.000.020.020.020.020.020.020.020.030.030.030.040.040.030.050.080.070.080.120.100.080.060.080.060.050.050.060.080.070.350.520.701.180.831.571.481.701.851.791.861.922.161.942.031.842.122.312.513.133.263.092.842.482.302.442.322.634.57managed money (m mkt mut fund, mut funds, closed end funds, private pension funds)5.155.686.186.607.557.778.059.039.5110.3911.4811.9411.9513.4314.2914.6015.7614.7915.5016.0916.5315.9816.9917.4916.4315.8616.5216.9214.8513.3815.4915.7415.3715.7316.9418.5619.5921.0321.1320.7023.4623.9923.8223.3224.6324.6126.6327.1828.8228.8130.5331.8933.2633.8234.6132.5730.3727.8629.0828.9929.1529.9130.3825.49105.1468536129100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100

Sheet1

Source: Federal Reserve Flow of Funds AccountsManaged MoneyCommercial BankingCommercial BankingBank Holding CompaniesSaving InstitutionsCredit UnionsState and Local Government Retirement FundsGovernment-Sponsored EnterprisesAgency and GSE-backed Mortgage PoolsIssuers of Asset-Backed SecuritiesFinance CompaniesReal Estate Investment TrustsSecurity Brokers and DealersFunding CorporationsManaged Moneylife insurance companiesShares of Financial Institutions (% of Total Assets)

Sheet2

Sheet3