Dealbook has posted a new report from Standard & Poor's that suggests that Dodd-Frank and other regulations will likely push more business to the shadow banking industry. It's an industry that hs conventionally defined amounts to the broad web of unregulated finance companies that has become critically important.

The shadow banking has thrived despite a long history generated controversy. Now we may see these firms make massive gains as regulated entities either struggle or punt in certain markets. The report suggests that derivatives might be an area where shadow firms might benefit, although we're seeing nothing but desire from banks desperate to hang onto the high margin in various OTC derivatives markets.

Lending to higher risk entities is something the analysts have already discerned. For example, some banks are declining to loan as much to certain business development corporations but end up financing alternative private funds that turn around and loan to these corporations. Mortgage servicing may also be ripe for shadow banking, as regulated entities may see fit to offload this activity to a company that is specifically capitalized for this function.

According to the report, a whole panoply of consumer services may also be affected, including: payday and other short-term small-balance consumer loans, private student loans, subprime autoloans, money transfers, debt collection and prepaid debit cards.

For more:
- here's the report
- here's the Dealbook article  

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