It seems to me we all want to live in a ZERO risk environment. Zero covid, zero defaults, zero losses, zero accountability. Well it is an illusion and the sooner people realize that the answer is not more regulation, stricter rules, Etc...the best it would be. Risk related to lending has been pushed into the shadow banking system, i.e. CLO, structured credit, direct lending, credit funds but unfortunately these sources of capital are the first ones to dry up when risk is off. So the oxygen for many companies disappear when is needed the most. So what is the current mission of the banking system?
It seems to me we all want to live in a ZERO risk environment. Zero covid, zero defaults, zero losses, zero accountability. Well it is an illusion and the sooner people realize that the answer is not more regulation, stricter rules, Etc...the best it would be. Risk related to lending has been pushed into the shadow banking system, i.e. CLO, structured credit, direct lending, credit funds but unfortunately these sources of capital are the first ones to dry up when risk is off. So the oxygen for many companies disappear when is needed the most. So what is the current mission of the banking system?