This huge financial danger could now be worse than it was before the crisis

The failure to regulate the shadow banking system was one of the causes of the financial crisis.

As we noted in 2009, the Bank for International Settlements – often described as a central bank for central banks (BIS) – slammed the Federal Reserve for failing to rein in the shadow banking system:

How could such a huge shadow banking system emerge without provoking clear statements of official concern?

Years later, the Fed and other regulators have allowed the shadow banking system to grow even bigger.

As Reuters notes today:

The system of so-called "shadow banking," blamed by some for aggravating the global financial crisis, grew to a new high of $67 trillion...

[link to www.washingtonsblog.com]