Asset managers that operate outside the banking industry’s regulatory oversight are becoming more active in a market that burned traditional lenders in the 2008 financial crisis.
Seven years after the financial crisis, private funds in the U.S. are extending their push into traditional banking.
So-called shadow lenders — asset managers that operate outside the banking industry’s regulatory oversight — have been making an increasing number of leveraged loans to midsize businesses.
Now their involvement is growing in commercial real estate, a market that scorched traditional lenders when it blew up after the 2008 financial crisis.
No depositors
Shadow banks are firms that act like lenders but don’t have depositors, federal bank regulations or access to the Federal Reserve’s discount window, where banks can borrow when money is tight.