Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"This was a group of firms that really developed over the last 20 years. They were financial firms that acted like banks, that is, they borrowed money, they loaned money, they charged interest rates, they made investments. And yet they weren't classified as banks, and so they fell outside of the normal banking regulations, and these were companies like so-called investment banks, hedge funds, etc. And these were the firms that did a lot of what we would have called then innovative financial systems. Now, of course, we look askew at them, and these would be these kinds of very exotic mortgages where people didn't have to put down any down payment, no principal payment loans, etc. And of course in retrospect, we know now that a lot of home buyers got in trouble. But a lot of these innovations started with these so-called shadow banking firms. Now, the financial crisis in the last 18 months, of course, has brought the spotlight on these firms, and I can say that many of them have either been shut down or they have been moved to become conventional banks so that they are now under the regulation of the federal government and the Federal Reserve. But this was an innovative system, I think, that developed because there was cash to be had, particularly in foreign markets. It was also the origin of some of our current financial problems."