Insurance: Just Part of the Financial Sector? [6]

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Bullet points include: Bank balance sheets overstretched. Some business models too reliant on continued access to easy liquidity. E.g. funding loans via ‘shadow’ banking system, using repackaged loans as collateral. With hindsight, repackage structures (SIVs, CDOs etc.) overly exposed to liquidity risk. Credit crisis arguably primarily a liquidity crisis and only ‘solved’ by government injection of liquidity at potentially significant cost to the public purse. May just have nationalised the problem, c.f. current Eurozone sovereign debt crisis. Regulators / supervisors / governments keen to avoid history repeating itself

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