Find the full article in the Ideas magazine of January 13, 2019.
- Nonbank lenders are now big players in the US mortgage market ;
- They dominate the market for loans to low-income families guaranteed by the federal government ;
- These alternative lenders are subject to far less regulation than mainstream banks;
they are heavily reliant on short-term funding and have only a slim cushion of resources to weather a shock ;
- They pose a financial stability risk—a systemic liquidity risk ;
- If a crisis hits, the taxpayer could be on the line—for considerable amounts ;
- Federal regulators are only beginning to become aware of the risk exposure .