The Calm Headlines Hide a Dangerous Reality At first glance, America’s banking system looks healthy. The latest industry data from the FDIC paints a reassuring picture: Deposits rising for six straight quarters Loans growing nearly 6% year-over-year Bank balance sheets expanding On paper, everything looks steady. But dig one layer deeper and a different story emerges. A massive and rapidly expanding category of lending is now sitting on bank balance sheets. It’s not traditional mortgages. Not small business loans. Not consumer credit. It’s loans to non-bank financial institutions—the sprawling network often called the shadow banking system. And the scale is staggering. The Fastest Growing Risk in Banking Loans from banks to non-depository financial institutions surged to $1.4 trillion by the…
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