Shadow Banks Make Diciest Loans While Wall Street Retains Risk
The shadow of a building is seen here on other buildings on Wall Street near the New York Stock Exchange.
Photographer: John Taggart/BloombergThis article is for subscribers only.
Wall Street has cut its lending to the riskiest companies, shifting its financing to nonbanks that make the loans instead, according to a team of analysts at the Federal Reserve Bank of New York.
“Since those policies reach beyond individual banks and target risk in the entire banking system, they are more likely to trigger significant responses that may have unintended consequences,” said the report by Sooji Kim, Matthew Plosser and João Santos.