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.
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US lenders’ debt to shadow banks passes $1t
“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.”
