As I will discuss later, it is not clear to me that the delineation between secured and unsecured funding for the banking system is quite so stark as current market conditions would imply. At this point, it is worth thinking about the various forms of funding available to banks. For the purposes of this talk I will simplify these into five categories: 1.
Equity raising. 2. Deposits, some portion of which may be insured or guaranteed. 3. Unsecured wholesale funding, in the form of bond issuance or short-term paper. 4. Asset-backed issuance, such as residential mortgage backed securities (RMBS), where the bank sells a security backed by a pool of assets to the market. The assets are no longer present on the bank’s books after the sale.