Crime Against Humanity: the Holy GAAP, 33

In other words, credit line provision continues to be in essence a “bank business.” In the case of term loans, however, the decline in the lead banks' aggregate retained share was accompanied by an even bigger decline in the share of the term loans acquired by other banks. Of the 47 billion dollar term loans originated in 1988 that are covered in the Shared National Credit program, lead banks and participating banks together retained on their balance sheet 89 percent of the amount of credit. Of the 315 billion dollar term loans originated in 2007, banks retained on their balance sheet only 44 percent. […] In 1993, of the 22.7 billion dollars in term loans that banks originated, they sold 2.2 billion dollars to CLOs (supposedly, Collateralised Loan Obligations investors, author’s note), brokers and investment banks, investment managers, private equity firms, finance companies, and foreign nonbank institutions – the so−called "shadow banking" system. In 2007, of the 315 billion dollars term loans that banks originated, they sold 125 billion dollars to these same nonbank institutions. Thus, over a period of roughly fifteen years, the annual volume of term loans and the corresponding credit risk that banks transferred out of the banking system increased by more than 120 billion dollars. While the impact this transfer may have on the stability of the entire financial system and the availability of credit to corporations is still unclear, its contribution to the growth of nonbank financial intermediaries, including that of the unregulated shadow banking system, is apparent.”

I think that gives an idea of the role of off−balance sheet activities within the framework of the Holy GAAP.