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Panel one - Margaret Blair

Margaret M. Blair, Vanderbilt University Law School

Presentation summary

  • An increasing share of income in US is going towards top decile and top percentile
  • An increasing share of GDP is in finance; 7.5% of GDP today, double what it was in 1980s
  • Since late 1970s the ratio of assets in shadow banking institutions to assets in depository institutions has increased greatly
  • Financial sector and leverage
    • Leverage in depository institutions v. shadow banking institutions
    • Unregulated shadow banking institutions have experienced steady increase in leverage since 1960s
      • Shadow banking institutions’ leverage higher than depository institutions’  – instability of sector connected to big bonuses/payouts for traders and executives
      • Creates financial instability by pushing risk onto creditors