What Created This Monster?

"Bear Stearns has made it obvious that things have gone too far. The
investment community has morphed into something beyond banks and
something beyond regulation. We call it the shadow banking system."

NYTimes.com
March 23, 2008
What Created This Monster?
By NELSON D. SCHWARTZ and JULIE CRESWELL

<excerpts>
..
The Federal Reserve not only has taken action unprecedented since the
Great Depression -- by lending money directly to major investment banks
-- but also has put taxpayers on the hook for billions of dollars in
questionable trades these same bankers made when the good times were
rolling.
..
..
 On Wall Street, of course, what you don't see can hurt you. In the
past decade, there has been an explosion in complex derivative
instruments, such as collateralized debt obligations and credit
default swaps, which were intended primarily to transfer risk.

These products are virtually hidden from investors, analysts and
regulators, even though they have emerged as one of Wall Street's most
outsized profit engines. They don't trade openly on public exchanges,
and financial services firms disclose few details about them.
..
..

full text
http://www.nytimes.com/2008/03/23/business/23how.html?ref=business