Banks are healthier and taking on less risk, but that doesn't necessarily mean that the financial system is safe. The risk has largely just moved outside the banking system to the so-called shadow banking industry, ratings agency Fitch said Tuesday.

What it means: Shadow banks are financial institutions outside the traditional banking sphere that aren't governed by U.S. banking regulations.

Fitch warns:

  • "Shadow banking's ascension may signal growing systemic risks."
  • "Shadow banking [is] exhibiting notable post-crisis growth, driven by bank regulation, low interest rates, the favorable economic backdrop and the growth of financial technology."

Why it matters: The risks could include "direct and indirect exposures faced by banks, insurance companies and pension funds, reduced financing availability for banks and non-financial corporate borrowers, and increased asset price volatility," Fitch analysts note.

  • The shadow banking industry held $52 trillion globally, 13.6% of total financial assets, at the end of 2017. That's up from $30 trillion at the end of 2010, according to the Financial Stability Board.

Go deeper: Fitch thinks Venezuela will get worse before it gets better

Go deeper

Trump says he wants 9 justices in case Supreme Court must decide 2020 election

President Trump told reporters at the White House on Wednesday that part of his urgency to quickly push through a replacement for the late Justice Ruth Bader Ginsburg is that he believes the Supreme Court may have to decide the result of the 2020 election.

Why it matters: Trump claimed at the Republican National Convention that the only way he will lose the election is if it is "rigged," and he has declined to say whether he would accept the results of November's election if he loses to Joe Biden.

"Not enough": Protesters react to no murder charges in Breonna Taylor case

A grand jury has indicted Brett Hankison, one of the Louisville police officers who entered Breonna Taylor's home in March, on three counts of wanton endangerment for firing shots blindly into neighboring apartments.

The state of play: Angering protesters, the grand jury did not indict any of the three officers involved in the botched drug raid on homicide or manslaughter charges related to the death of Taylor.

Judge orders Eric Trump to testify in New York probe before election

Photo: Ira L. Black/Corbis via Getty Images

A judge on Wednesday ordered Eric Trump to comply with a subpoena to testify before the presidential election in a New York probe into the Trump family business.

The state of play: New York Attorney General Letitia James (D) last month said her office had filed a lawsuit to compel the Trump Organization to comply with subpoenas related to an investigation into whether President Trump and his company improperly inflated the value of its assets on financial statements.

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