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Shadowing Lenders And Consumers: The Rise, Regulation, And Risks Of Non-Banks, Shelby D. Green

Elisabeth Haub School of Law Faculty Publications

Since the financial crisis of 2008, “shadow banking” or financial transactions by “non-banks,” has skyrocketed. Non-banks are not depositary institutions and as such, they roam free, largely outside the purview of the bank regulators. They occupy all parts of the credit markets, from mortgage loan origination to payday lenders. Untethered, they operate without government guarantees, such as deposit insurance and have no access to emergency government lending facilities, such as the Federal Reserve's discount window.

There are both positives and negatives in the rise of non-banks. On the positive side is market liquidity and greater diversity of funding sources for …