The dismantling of the economy’s legal infrastructure V-3: Portfolio theory replaces banking theory

The inflation of the 1960s and ‘70s put a great deal of stress on the compartmentalized financial system that had been constructed in the 1930s. This stress caused fissures in the 1930s financial structure in no small part due to a shift in the intellectual framework through the which the financial system was viewed.

From the perspective of the banking theory which underlay the reforms of the 1930s, banks are special, because they issue monetary liabilities and serve as a coordinating device that promotes growth by making the monetary finance of working capital possible. For this reason, it is essential both to protect their special role in the financial system and to circumscribe and control bank activities in order to prevent expansion of the money supply from fostering asset price bubbles or inflation. Thus, the 1930s framework instructed regulators to manage the stressors on the financial system in such a way that the core functions of the banking system would be protected.

By the 1970s, however, policymakers were working with a different monetary model than the one that had been used to design the structure of the financial system in the 1930s. In the 1970s the dominant intellectual framework, portfolio theory, claimed that banks intermediated between borrowers and lenders and were “special” only due to the privileges granted to them by law; non-bank financial intermediaries could provide the same services as banks and the money-ness of their liabilities was just a matter of degree, not kind (Tobin 1963; see also Keeley & Furlong 1986). With this new intellectual framework, policymakers did not perceive a need to police the boundary between bank liabilities and non-bank liabilities in order to protect the special status and role of banks in the economy (which notably was precisely what the Glass-Steagall Act was designed to do). Instead, policymakers believed that non-banks could provide the same services as banks and thus that competition between banks and non-banks was healthy.

Thus, when the inflation of the 1960s and ‘70s led to the growth of non-bank financial intermediation, this was viewed as healthy competition for banks, not a as a stressor that threatened to destabilize the banking system. In this environment, financial innovation was allowed to create profound fissures in the banking structure that had been designed in the 1930s. By 1980 the system was clearly breaking down. Subsequent reform was based on the new theory that banks were just one kind of financial intermediary and should be forced to compete for funds with non-banks.[1] In the jargon of sociology, portfolio theory became performative; that is, the theory was no longer just a description of the world, but began to transform it.

Portfolio theory affected the mortgage market as the legal distinctions between thrifts and commercial banks were steadily eliminated. Bank funding was also transformed in a way that raised the costs to banks and ultimately led to the transformation of bank asset portfolios, facilitated by regulators who sought to increase banks’ income-earning capabilities. As banks were permitted by supportive regulators to encroach upon the broker-dealers’ business, by the 1990s the Glass-Steagall Act mostly constrained the activities of the broker-dealers and not those of the commercial banks.

After three decades of on-going transformation of the financial system, the US entered the 21st century with a financial structure that embraced an intellectual framework where banks were just one of many financial intermediaries competing on a playing field that was superficially even. In fact, over the course of the 2007-09 crisis we learned that banks are special – because they have access to the Federal Reserve’s discount window – and a major part of their business was providing guarantees to non-banks that effectively gave the non-banks indirect access to the discount window.

This post addresses the fissures created during the 1960s and ‘70s in the compartmentalized banking system and how they were aggravated by portfolio theory. Subsequent posts will address regulatory reforms under Volcker, under Greenspan, and in the run up to the crisis.

The era of inflation, 1965 to 1980

Recall that the 1930s reform of the banking system created a segmented structure with commercial banks separate from investment banks and with two types of mortgage finance: government insured mortgages that were typically funded by commercial banks and insurance companies and “conventional” mortgages that were funded by the thrifts, which specialized in mortgage lending. Commercial banks could sell their mortgages to Fannie Mae while the Federal Home Loan Banks provided liquidity to the thrifts.

The late 1960s saw inflation and two sharp increases in interest rates. The first increase raised concerns about the viability of the thrifts as they raised the rates paid on savings in order to compete for funding. For this reason, in 1966 Regulation Q, which had since the 1930s restricted the interest that banks could pay on savings, was extended to the thrifts. The end result was, however that the savings and loan industry – which since 1945 had been growing by 11 to 19% per annum – suddenly found itself struggling to maintain funding levels. Commercial banks, on the other hand, had historically relied on non-interest-bearing demand deposits for funding, and so were less dependent than thrifts on savings accounts and less affected by the macroeconomic situation. As the thrifts were by far the most important source of residential mortgage finance, the availability of mortgages dropped, precipitating a crisis that was only addressed in part by legislation in 1968 and 1970.[2]

Thus, in 1970 when the President’s Commission on Financial Structure and Regulation was appointed,[3] one of its’ principal tasks was to offer recommendations for transforming the financial system into one capable of achieving the administration’s housing goals (PCFSR 1972: 25, 48, 78). Two additional concerns were the finance of small businesses and of state and local government, which had also been adversely affected by the macroeconomic situation (PCFSR 1972: 49). The Commission stated pointedly in its report that it was not tasked with critical examination of the administration’s goals but only with how to achieve them and also offered the caveat that inflationary fiscal policy was the unaddressed underlying cause of the mortgage finance problem (PCFSR 1972: 8, 78-79).

As was noted above, by the 1970s the intellectual framework embraced by policymakers was based on portfolio theory and this was a very different monetary model from the banking theory that had been used to design the structure of the financial system in the 1930s. The new framework posited that non-banks could provide the same services as banks and promoted the idea that competition between non-banks and banks could ensure that financial services were more efficiently provided to consumers and firms.

In 1972 the Commission explained how to restructure the financial system to promote the finance of mortgages: convert the thrifts into commercial banks and authorize the use of demand deposit funding for mortgage finance (PCFSR 1972: 37, 40, 48).[4] This policy was described as an increase in competition between financial intermediaries that was desirable, because commercial banks with their lower cost funding could provide borrowers with cheaper loans (PCFSR 1974: 45). The only danger that the Commission saw arising from this policy was that of an increase in bank failures, a risk that could be managed with safety and soundness tests (PCFSR 1972: 45, 48). That is, even though the Commission framed banks as “creating money” (PCFSR 1972: 43, 45), its members did not perceive the danger of financial market instability that can arise when money creation is combined with the finance of long-term assets.

Of the recommendations made by the Commission, only a few were implemented promptly: in 1973 Regulation Q ceilings for large time deposits were suspended, and in 1974 constraints on commercial bank funding of mortgages were relaxed and securitization was promoted (Consumer Home Mortgage Assistance Act, Pub. L. 93-383).[5] Many more of the Commission’s proposals would be adopted over the course of subsequent decades including: the elimination of the regulation of interest rates on savings accounts (PCFSR 1972: 23); the elimination of restrictions on branch banking (PCFSR 1972: 59, 61-62); the use of insurance contracts to address interest rate risk, in other words, interest rate swaps (PCFSR 1972: 83);[6] the promotion of variable rate mortgages (PCFSR 1972: 81-82); the elimination of statutory restrictions on assets eligible for discount at the Fed (PCFSR 1972: 48); the treatment of subordinated thrift and bank debt as regulatory capital (PCFSR 1972: 41, 51);[7] and the elimination of statutory limitations on banks’ off-balance sheet guarantees (i.e. acceptances) (PCFSR 1972: 49-50).[8]

From the perspective of 1930s banking theory these policy recommendations did not make sense: careful regulation is needed both to protect banks’ special role in the financial system and to circumscribe bank activities in order to prevent expansion of the money supply from fostering asset price bubbles or inflation. As a result of the very different monetary framework being used in the 1970s, however, the blueprint for financial reform that was laid out in the early 1970s sought very deliberately to erase the clearly drawn distinction between commercial banks and thrifts.

Subsequent regulation typically emphasized the importance of facilitating competition between intermediaries and of removing the “inefficiencies” created by the “anti-competitive” restrictions placed on commercial bank activities (CEA 1981: 111; Isaac 1984: 197-98). Some of these reforms, such as the lifting of constraints on interest rates paid by depository institutions and the elimination of branch banking restrictions, have likely improved the operation of the financial system.[9] There was however a failure when reforming the structure put in place in the 1930s to distinguish the wheat from the chaff, because the aspects of the 1930s structure that served to stabilize the financial system were impossible to see when they were evaluated using a theoretic framework, portfolio theory, that took financial stability as given. In the language of economic sociology, portfolio theory played a performative role in reshaping the real world environment to conform with the theory: financial stability became an assumed property of the system, rather than one that was carefully crafted and protected.

The inflation of the late 1960s did not just result in the development of a blueprint for transformation of the financial system, but also had a more direct effect on the financial system. When the larger commercial banks due to Regulation Q were unable to offer their best corporate clients a competitive rate on savings accounts, in an effort to keep their business the banks facilitated the transfer of savings accounts into lending on repo, commercial paper, Treasury bills, bankers’ acceptances, and other money market instruments (PCFSR 1972: 28; CEA 1981: 108-09; Hahn 1993: 111). To address the funding gap thus created, the large banks were able to turn to Eurodollar markets or issue commercial paper at the holding company level which would then buy loans from the subsidiary bank (PCFSR 1972: 47). In short, already in the 1960s inflation had begun to result in disintermediation of the banking system. This left the smaller banks and the smaller businesses that did not have access to these options at a disadvantage.

Four key elements of the disintermediation of the banks that were important through the 1970s and 1980s are discussed in detail below: thrift transaction accounts, Eurodollar markets, money market mutual funds, and the standby letter of credit.

Thrift transaction accounts

Based on the traditional banking theory of the 1930s, when thrift funding first became a problem in the late 1960s the government should have made a determination of how important consumer-friendly mortgages were as a policy matter and then based on the answer either subsidized the thrifts’ activities directly or allowed the thrift industry – and the availability of mortgages – to shrink. Unsurprisingly, politicians preferred to have their cake and eat it too – and by embracing the new theory that the 1930s restrictions on banking were anti-competitive they were able, temporarily at least, to do so.

By the mid-1970s the FHLB Board was encouraging thrifts to compete with banks by making transactions using savings accounts easier. Thus, thrifts were early adopters of ATM machines and of contracting with local business to provide point-of-sale access to thrift savings accounts (Lovati 1975). Around the same time the laws governing thrifts were relaxed to permit those located in New England and New York to offer what were effectively interest-bearing checking accounts (CEA 1981: 110).[10] As interest rates continued to rise over the course of the 1970s, the effect of this new policy was to redirect the flow of transaction accounts from commercial banks which faced a statutory prohibition on paying interest on checking accounts to the thrifts.[11]

Eurodollar accounts

A Eurodollar account is an account denominated in US dollars that is held outside of the United States. As every Eurodollar account is associated with a US clearing account, Eurodollar accounts are either held at the foreign branches of US banks, or at foreign banks which access the US clearing system through US correspondent banks.[12]

The Eurodollar system began to develop in the 1950s as British exchange controls and the weakness of the pound led to the dollar being the preferred currency for the finance of international trade, while at the same time the banks with expertise in international trade finance were mostly British. The Eurodollar system made it possible for international trade to continue as it had in the past, just denominated in dollars held abroad rather than in British pounds. The British (and other foreign) banks were not subject to US regulation (including Regulation Q, reserve requirements, and FDIC fees) and British regulation of international finance was “light touch.” As a result, Eurodollar accounts were for the most part unregulated.[13] On the other hand, mostly located in Europe, Eurodollar accounts were completely inaccessible to most individuals and small firms in the US.

Banks issuing Eurodollar deposits could not just pay higher interest rates than US banks, they also had lower operating costs because they did not need to meet reserve requirements or pay FDIC fees. As a result, these banks could also afford to charge less on loans. In short, the Eurodollar market did not compete with the US banking system on an even playing field. Foreign bank lending in the US more than doubled over the course of the 1970s (CEA 1981: 109).

Money market funds

In 1971 the first money market fund was created. A money market fund (MMF) is an investment product offered by a brokerage firm or mutual fund company that invests only in short term assets and that treats its shares as having a fixed value that earns interest, just like a savings account. These “interest-bearing” accounts also offer some check-writing privileges. As the accounting treatment for MMFs was first addressed by the SEC in 1977 (42 FR 28999) and only formally approved by the SEC in 1983 (48 FR 32555), this was a case of industry pushing boundaries and being successful after the instrument had become “too big to fail.”[14] By the end of 1982 nearly as much money was held in MMFs as in demand deposits at commercial banks (see Chart 1).[15]

Chart 1: Cash Assets,

Cash assets

If regulators had required MMFs to obtain a banking charter in order to offer fixed value accounts and/or checking privileges, and if MMFs had therefore chosen investment fund regulation, mark-to-market valuation and no checking privileges, they probably would still have seen some growth in the 1970s. But they also would probably have been a short-lived wonder that saw massive outflows to the banking system as soon as banks were permitted to pay competitive rates. In short, if regulators had embraced the 1930s view of banking and defended the special role of banks, the disintermediation of banks would have been smaller and most importantly much easier to reverse.

Unsurprisingly, with what used to be bank deposits flowing into MMFs, the banks also found they were facing stiff competition on the lending side of the market. From 1972 to 1979 the role played by the commercial paper market in short-term business lending nearly doubled. In addition, as was noted above, business lending by foreign banks more than doubled. At the demand of their biggest clients domestic banks were forced to lend below the “prime rate” – nominally the rate they offer their best customers – and saw their share of short-term business debt drop from 86% in 1972 to 60% in 1979 (CEA 1981: 109).

The standby letter of credit and loan commitments

The growth of the commercial paper market was only possible, because bank regulators allowed banks to provide guarantees that supported its issue. Lenders in the commercial paper market recognized that commercial firms could face unpredictable liquidity crises and were unwilling to lend to them at competitive rates unless a bank was willing to guarantee payment on the paper in the event of a liquidity crisis. Thus, issues of non-bank commercial paper were – and are – typically supported by a bank guarantee (Hurley 1977: 530; Stigum & Crescenzi 2007).

The law governing bank guarantees in the US was clear in the early 1970s: there were specific recognized types of guarantee that were permitted, including letters of credit. Guarantees that did not fall under a recognized category were ultra vires and most likely void. A letter of credit (LOC) is a contract for a bank to make payment if the conditions in the letter of credit are met, and is a traditional means by which international trade is financed since the seller of goods can reliably collect payment from the bank on the basis of shipping documentation.  A couple of creative bank lawyers created the “standby letter of credit” in the early 1950s, which was a promise to pay a customer’s obligation upon evidence of the customer’s default. The standby LOC is distinguished from the LOC by the fact that the bank does not anticipate having to make payment on it. A standby LOC is the equivalent of a guarantee of a customer’s liability,[16] which (with explicit exceptions) was ultra vires. The OCC, the national banks’ regulator, turned a blind eye to it, and through the 1960s this was a corner of the banking world that drew little attention (Kettering 2008: 1662-66).

In the early 1970s the Fed was trying to hold a strict line on traditional banking regulation. It deemed that if a bank issued commercial paper, borrowed using a repo, or guaranteed a customer’s IOU, all those liabilities were subject to the regulations governing deposits including required reserves and interest rate ceilings (Mayer 1974: 236). Similarly, the FDIC treated standby letters of credit as violations of their regulations. But neither the Fed nor the FDIC regulated national banks. The dramatic growth in the use of these instruments by national banks forced the Fed and FDIC to relax their stance, and in 1974 the regulators jointly agreed to very limited regulation – requiring reporting of outstanding standbys in the footnotes to the banks’ financial statements as well as treating them as loans for some purposes (Kettering 2008: 1667-69). The regulators all defended this policy before Congress in 1976, when Congress, worried that regulatory competition was weakening the banking system, threatened to impose strict controls on these instruments (US Senate 1976).

It was generally recognized at the time that by issuing a standby letter of credit, a bank was engaging in “off-balance sheet” banking: this was a way to fund off-balance sheet assets with off-balance sheet liabilities and earn a fee instead of an interest rate spread (Naegele 1976: 278; Keeley 1988: 12). The opportunities for regulatory arbitrage are obvious (and indeed what the Fed was trying to avoid with its initial strict policy). The door was, however, opened in the 1970s, and now bank guarantees of customer liabilities are treated as bank activities of long-standing (Kettering: 2008: 1671).

Capital requirements on standby LOCs were not imposed until the early 1990s when the Basel I Accord was implemented (Kettering 2008: 1671). Even then, however, guarantees that were short-term or “of less than one year” were granted a zero credit conversion factor under the risk-weighting rules – in other words, some guarantees were not subject to capital requirements at all. Needless to say, banks structured their guarantees in order to take advantage of lower capital ratios (Moody’s 1997: 4).

Summary: the disintermediation of the 1970s

In short, the massive disintermediation of the banks that took off in the 1970s was only possible, because regulators allowed it to happen. While some leakage into the Eurodollar markets – which provided support to the international role of the dollar – was inevitable, it was also naturally limited in scope. By contrast, the growth of money market funds and of bank-supported commercial paper markets was not inevitable. It was instead the product of a combination of forces including the fragmented structure of US regulation that hampered the enforcement of strict regulatory policies, and an environment where the predominant monetary theory held that the services provided by banks could also be provided by competitive financial intermediaries. Indeed, in some ways MMFs were a realization of the portfolio theory vision expressed by Tobin in his 1963 paper on banking.

But portfolio theory, like all theories, is an incomplete representation of a more complex reality. Thus, if the primary effect of portfolio theory in this period was to transform the financial system to be more like the theory, an important secondary effect was to obscure the actual relationship between the banks and the money market funds and commercial paper markets with which they were putatively in competition. While MMFs that invested only in government obligations could be viewed as “narrow banks” that competed with the conventional banks, for decades such MMFs comprised only about 25% of all MMFs or less. The vast majority of money market funds served as an indirect form of bank finance.

Chart 2: Taxable Money Market Fund Assets from 2015 ICI Fact Book

MMF assets

Chart 2 (which aggregates both Prime and Government MMFs) shows that bank CDs, commercial paper and repos made up 70 to 80% of MMF assets in the 1980s. Repos were typically repos of government debt obligations with a bank counterparty and thus served as a means by which banks could treat their government debt holdings as liquid assets. While commercial paper could be financial or non-financial, the Federal Reserves’ Flow of Funds report (Table B.103) makes it clear that there simply wasn’t enough non-financial commercial paper outstanding to make up more than a portion of MMFs commercial paper assets.[17] In short, in most years half or more of the MMFs’ commercial paper holdings were comprised of financial commercial paper, that is, commercial paper issued by banks. Furthermore, as was discussed in detail above even non-financial commercial paper relied on the support of off-balance-sheet bank guarantees.

In short, MMFs were only nominally in competition with banks. In practice, MMFs were just an indirect way of funding banks. They served to replace direct deposit-based bank funding with more indirect, wholesale bank funding intermediated through the MMFs.

Just as MMFs were only nominally in competition with banks, commercial paper could not be accurately characterized as “market-based” competition for bank loans. First, as was noted above most of the commercial paper outstanding was financial commercial paper and thus provided wholesale financing for banks, not competition for bank loans. Secondly, non-financial commercial paper relied heavily on off-balance-sheet bank guarantees. Indeed, the regulators of the 1970s viewed the guarantees that supported the commercial paper market as a means for banks to make off-balance-sheet loans (OCC 1974, 39 FR 28974; FDIC 1974, 39 FR 29178; Federal Reserve 1974, 39 FR 29916). As a result, while non-financial commercial paper did encroach on bank’s direct lending activity, it was only able to do so because of indirect “loans” in the form of off-balance-sheet guarantees provided by banks to support the issue of non-financial commercial paper. Another illustration of the complexity of the banks’ relationship to the commercial paper market is the fact that the Federal Reserve Board permitted banks to “engage to a limited extent in commercial paper placement activity” starting in December 1986 (73 Federal Reserve Bulletin 138, 1987). From the perspective of many borrowers, commercial paper may have just looked like a special kind of a bank loan.

Thus, portfolio theory didn’t just shape a new financial system, it also had the effect of obscuring the relationship between the new entities and instruments and the banking system. By framing MMFs as “competing” with banks for deposits, portfolio theory concealed the fact that MMFs mostly served as an indirect “wholesale” channel of bank funding. Similarly, by framing commercial paper as “competing” with bank lending activities, portfolio theory concealed the fact that the off-balance-sheet bank obligations that made the issue of non-financial commercial paper possible were themselves variants of loans – and consequently that commercial paper was arguably just a more complicated form of bank lending.

Portfolio theory, by concealing the true nature of the transformation of the financial system, also concealed the fact that in this new system of indirect rather than direct bank intermediation, the largest banks had a significant advantage. Wholesale funding carries risks for the lender that deposits don’t and therefore wholesale funding markets favor large, too-big-to-fail banks. For the same reason, too-big-to-fail banks had an advantage in providing the guarantees supporting commercial paper issues. In short, the principal effect of the shift from banking theory to portfolio was not the advertised effect, that of promoting competition and facilitating the growth of “market-based” lending, but instead to promote the interests of large, too-big-to-fail banks which played key roles in making the so-called “market-based” lending work.


[1] There was a general movement in favor of “pro-competitive” deregulation at this time (see Derthick and Quirk 2001). Note that I put “pro-competitive” in scare quotes, because it is regulation that makes it possible for markets to be competitive, and the question should be directed to whether the market is correctly regulated to promote competition and other important goals – such as fair access and management of externalities.

[2] By creating Freddie Mac and authorizing an expanded role for Fannie Mae in the mortgage market this legislation enabled the GSEs to play an important role in supporting mortgage markets.

[3] President Nixon was fulfilling a campaign promise made to business leaders to establish a panel studying financial structure for the stated purpose of addressing the problem of the Democrat’s overregulation of the financial sector and to prevent impairment of the nation’s ability to raise capital (NYT Oct 2, 1968, p. 28). He appointed a panel composed mostly of business executives and apparently the report was written for the most part by the staff of professional economists (Luttrell 1972).

[4] Given that this position is central to the Commission’s recommendations, it is remarkable that the Commission also observes that it is in general best to pursue “social priority investments” via tax credits and direct subsidies to consumers in order to “avoid the warping of financial institutions” (PCFSR 1972: 86).

[5] National banks were permitted to hold loans of up to 90% of the value of residential property as long as the loan was amortizing and the term was no more than 30 years. (In 1955 the maximum term of National bank real estate loans had been extended from 10 years to 20 years, Pub. L. 84-343). The loan to value permitted on mortgages purchased or securitized by Fannie Mae and Freddie Mac was raised to 80%, with an exception as long as the excess over this level was covered by private mortgage insurance. For national banks aggregate real estate loans not insured/guaranteed by an Agency could not exceed the greater of capital plus surplus or savings plus time deposits. Second lien loans could not account for more than 20% of capital plus surplus. (§ 24(a)(3) ).

[6] Note, however, that the Report finds that “Since the principal causes of wide interest rate movements are changes in the mix of monetary and fiscal policies, the only appropriate insurer against interest rate risks would appear to be a federal government agency.” (PCFSR 1972: 83).

[7] Note that bank debts of less than seven years – including repurchase agreements – were treated as deposits and subject to both reserve requirements and interest rate regulation (PCFSR 1972: 51). In the inflationary environment of the 1970s there probably was a need to distinguish bank deposits from repos and subordinated debt.

[8] Note that the Commission was aware of the benefits of securitization, but, concerned that it contributed to disintermediation, gave it only lukewarm support (PCFSR 1972: 84).

[9] One should note, however, that Regulation Q meant that monetary policy that pushed interest rates above the statutory limit could have a fairly immediate quantity effect on bank funding and this gave monetary policy an effectiveness that has arguably never been recovered.

[10] Technically they were NOW (negotiable order of withdrawal) accounts.

[11] Congress authorized NOW accounts in New York in October 1978. The next four months saw a rare decline in national demand deposits of 1%, while “Other checkable deposits” which include NOW accounts doubled. On the other hand, at the same time commercial banks were permitted to offer “automatic transfer of savings” or ATS accounts which also fall under “Other checkable deposits” (WaPo Oct 29 1978), so the causality here is unclear.

[12] While the account is held outside the US, every Eurodollar account clears within the US system and every Eurodollar transfer is associated with a transfer of reserves from one US bank to another within the US (just as would be the case with a domestic transfer of funds). Because of the way Eurodollar accounts are cleared, one can reasonably claim that even though the Eurodollar account is held abroad, the dollars never actually leave the US. Given this structure, the Eurodollar system was only possible because US regulators facilitated its operation.

[13] Note that while branches of US banks located in foreign countries were also not subject to Regulation Q, reserve requirements, or FDIC fees, there were constraints on the transfer of money within a bank from the US to its foreign branch.

[14] See Kettering (2007) on too big to fail financial instruments.

[15] Note that in the early 1970s Regulation Q was suspended for large time deposits. This policy was inadequate to reverse the flow of funds out of banks.

[16] The SEC recognized this fact by treating standby LOCs as guarantees within the meaning of the Securities Act (Kettering 2008: 1664).

[17] In addition, I have data on financial and non-financial commercial paper outstanding from 1991 to the present that was downloaded in the past from the Federal Reserve website. (Currently the data on the 1990s is apparently no longer available.) These data make it clear that since 1991 financial commercial paper outstanding has been at least double non-financial commercial paper and that the ratio has grown significantly over time.


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