Appendix 5 — Independent Specialists — FHCs' & DBDs' Reliance on Them (Tail-Risk Absorption)

The internal and external shadow-banking systems are symbiotic: independent specialists (LPFCs, securities lenders) fund banks and broker-dealers by buying their term debt, while credit-risk repositories (mortgage/monoline/diversified insurers, AIG-FP) absorb tail risk by wrapping pools, ABS and CDOs — turning risky assets into AAA collateral for repo and ABCP funding. Hover any cell for instrument / tenor / rating / seniority / capital form / stress tags / backstop linkage; hover any arrow for the flow's instrument and counterparty role.