Matt Levine’s Money Stuff: Banks Make Loans to Non-Banks

NDFIs

Three themes that we have talked about a lot around here recently are:

1. Banking is getting narrower. The classic model of banking is that people need money to buy houses or do business, and they go to banks to borrow the money. This model is risky — if the borrowers don’t pay back the loans, the banks’ deposits will be at risk — and so post-2008 bank regulation has at various margins discouraged bank lending. But people still need loans, so now they increasingly borrow money from other lenders — “private credit” is the big buzzword, but also fintechs and trade finance firms ...