🚨 Why global credit rating agency Fitch warned of “shadow finance” in the U.S. yesterday

💰 U.S. banks’ “invisible detonator,” non-bank loans worth $1.2 trillion
The proportion of non-banking financial institutions (NBFI) loans has now jumped to 10% from 3% a decade ago. Smaller regional banks, in particular, are aggressively expanding, growing at an annual rate of 35%.

⚠️ JPMorgan’s Jamie Dimon’s ‘Wheelworm’ is coming out
Western Alliance has faced a $100 million loss crisis on a single warehouse loan, equivalent to 34% of its net profit in the previous quarter. The scary thing is that JPMorgan, known for its tight risk management, has also been hit.

🔗 Structural problems, not individual cases
Simultaneous losses are occurring in consumer credit and real estate mortgage warehouse loans. Fitch warns that one insolvency is likely to spread to several banks that have taken similar strategies.

🎯 Banks that have seen their NBFI lending soar by at least 70 to 500% over the past five years. Of these, banks that have borrowed more than 5% of their assets into shadow banking should keep an eye on them.