In this FedFin post-election forecast, we focus on the new U.S. non-bank regulatory framework, considering both the firms often called “shadow banks” and those more charitably characterized as marketplace lending. Nothing since November 9 has led us to revise our initial forecast that the FSOC designation and regulatory framework would be sharply curtailed if not altogether eliminated. Indeed, the thrust of statements since then and the potential nominees to key posts confirms that U.S. policy will surely skirt the non-bank restrictions targeted as a top priority during the Clinton campaign. The most significant remaining question thus is not what will happen to non-banks, but rather what U.S. bank regulators will do to banks – especially large ones – to protect their own charges from risk and also to use banks to the greatest extent they think possible to protect financial market stability.
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