US big banks face growing spillover risks from non-banks
NEW YORK -Non-bank financial institutions pose an increasing risk to America's big banks, economists said on Thursday in a post on the New York Fed's Liberty Street Economics blog.
Unlike large banks, non-banks operate under less restrictive regulatory regimes and monitoring standards. The growing bank and non-bank interconnectedness means that risks that used to lie solely with banks are now being repackaged between banks and non-banks. Commercial real estate is a place where this interplay could become increasingly, and potentially painfully, apparent, analysts say. One fifth, or $929 billion, of the $4.7 trillion of outstanding commercial mortgages will come due in 2024, according to the Mortgage Bankers Association. This looming maturity wall comes against a backdrop of rising vacancies, declining valuations and the higher-for-longer interest rate environment.
The economists noted that their findings underscore the need for financial regulation and systemic risk surveillance that recognizes banks and non-banks as"intimately interconnected."Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors.
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