A closer look
Wall Street’s shadow banking system used to be aggressively lo-fi. In the early days of the Philadelphia Stock Exchange, brokers needed quick overnight cash to settle trades. Enter the call loan certificate: highly informal, handwritten IOUs backed by a terrifyingly volatile pile of corporate stocks. If a broker defaulted, the lender just seized the underlying shares. It was a fast, loose, and entirely unregulated web of mutual debt that perfectly laid the groundwork for the cascading financial panics defining early American capitalism.
