Regulators worry growing financial ties between traditional and non-bank groups could pose systemic risks. These hedge funds, private equity firms, direct lenders and others use the money to leverage investments and increasingly lend it out to a range of risky borrowers that regulators have discouraged banks from lending to directly.
“We need to solve for the race to the bottom,” said Hsu. “And I think part of the way to solve it is to put due attention on those non-banks.”
https://www.ft.com/content/aaf74ab1-0dc0-4965-92d5-87aacaa8fc30?stream=top