The result was fantastic growth of unstable funding to the detriment of stability”. We know what happened in the crisis, once again proving the statement by Douglas Diamond: “Financial crises are everywhere and always about short-term debt”.36 The crisis itself made securitisations and repos shrink significantly. In the U.S., broker-dealers changed into banks, making the shadow banking sector smaller.
Post-reform, securitisations became less attractive being now subject to higher capital charges, securities vehicles were consolidated with bank sponsors and repos and OTC derivatives have become subject to central clearing. The overall progress in reducing risk in STFs and derivative markets has been significant, but might not be sufficient.