Moreover, if and as other firms outside that perimeter grow so as to pose similar risks – whether because of the migration of risky activities from the regulated sector or for other reasons – it will be important to apply prudential standards and consolidated supervision in a timely fashion. Still, the tool of designating firms is a limited one.
This impression is not entirely false, but neither is it entirely correct. It’s true that financial markets tend towards excess, and that all too many financial market players neglected risk management. It’s also true that the financial markets had moved away from their role as service providers to the real economy.