Nonbank lending, an industry that played a central role in the financial crisis, has been expanding rapidly and is still posing risks should credit conditions deteriorate.
div > div.group > p:first-child"> Often called"shadow banking" — a term the industry does not embrace — these institutions helped fuel the crisis by providing lending to underqualified borrowers and by financing some of the exotic investment instruments that collapsed when subprime mortgages fell apart.
The U.S. still makes up the biggest part of the sector with 29% or $15 trillion in assets, though its share of the global pie has fallen. China has seen particularly strong growth, with its $8 trillion in assets good for 16% of the total share. "The growth in non-bank mortgage lending, student lending, leveraged lending and some consumer lending is accelerating and needs to be assiduously monitored," Dimon wrote in his letter.
To be sure, industry advocates stress that its institutions still face substantial regulation and have become better capitalized in the days since the crisis. They cite the importance of the industry in providing financing to borrowers who can't go to traditional banks. Nonbank financials, which also include insurance companies, pension funds and the like, have grown 61% to $185 trillion. Traditional bank assets have increased 35% to $148 trillion during the same period.
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