In the 1950s and ’60s, a strange thing happened to the U.S. dollar: It left home. The Marshall Plan saw billions of dollars depart the United States to rebuild Europe. Those funds deposited in banks outside America—mostly in London—became known as “Eurodollars.” Operating beyond Federal Reserve and U.S. banking regulators’ reach, they moved with minimal oversight, creating a financial Wild West where enormous sums flowed freely while sanctions evasion, money laundering, and illicit financing thrived unimpeded.
HSBC, a major Eurodollar market player, exemplifies this legacy. In 2012, the bank paid a record $1.92 billion settlement after admitting it failed to stop at least $881 million in Sinaloa and Norte del Valle cartel drug proceeds from moving through its U.S. arm—alongside processing transactions for sanctioned regimes in Iran, Libya, Sudan, and Cuba. Leaked records later revealed the bank continued channeling suspect funds for years even under court-monitored probation.
Today, a parallel dynamic is reassembling itself—not offshore but within the “shadow banking” system of private credit. Private credit, defined as lending by non-bank institutions rather than traditional deposit-taking banks, has exploded from roughly $158 billion in 2010 to an estimated $2 trillion to $3.5 trillion globally today. The Financial Stability Board warns that this sector’s “complexity, leverage, and interconnectedness could amplify stress in adverse scenarios,” posing risks far beyond the private credit funds themselves. A recent Forbes analysis describes the resulting structure—a cycle where companies are leveraged, private credit funds finance them with more leverage, banks support the funds, and collateralized loan obligations stack atop—“closely resembling the pre-2008 shadow banking system: less transparent, less regulated, highly interconnected.”
Default rates in this sector have already climbed past six percent by some measures, even as Federal Reserve Chair downplays contagion risks. What makes this moment distinct from 2008 or the original Eurodollar era is who’s doing the lending: corporations themselves, including Apple, increasingly function as de facto financial institutions. These entities extend credit and manage sovereign-scale cash positions with the reach of major financial actors but none of the transparency obligations of banks or states. Business consultant Marjorie Kelly noted in The Divine Right of Capital that by 2001, 51 of the world’s top 100 economic entities were corporations rather than nation-states—enterprises with revenues rivaling GDPs while legally treated as “private” property. That imbalance has only intensified since then, with 74 of the top 100 economic entities now being corporations.
Whenever capital finds a channel outside regulatory architecture built for past crises, it moves there—and oversight lags years behind. It took decades and multiple laundering scandals to seriously reckon with Eurodollars. Private credit and corporate shadow lending are running the same experiment again, at greater scale. The questions remain: How much is happening unseen? And how much will it cost to find out?
The federal government has no constitutional authority to regulate commercial banking. Prior to the Securities and Exchange Commission’s 1930s creation, states governed securities trading with “blue sky laws” that protected depositors from fraud and detected bank insolvency. These guardrails encouraged public trust in financial institutions. Today, the shadow-banking system removes those safeguards—leaving no way to measure the health of opaque institutions controlling our financial situation.
