Yes, I understand all of this. What I don't understand is why the Fed "putting their finger on the scale" (which I don't dispute they are doing, as it's part of

Yes, I understand all of this. What I don't understand is why the Fed "putting their finger on the scale" (which I don't dispute they are doing, as it's part of their job) is a problem, and I still did not really pick up on Levine arguing for or against this, just saying (this is me paraphrasing, not intended to be a direct quote) "we could operate differently in theory due to all these alternative lenders that now exist in parallel with the traditional, regulated banking system, which would have some benefits and some drawbacks." I can see some upsides (in addition to matching bank creditor and debtor duration expectations), like the implication that it would be easier in some sense to safely manage large amounts of cash because said cash is invested in T-bills instead of who knows what, but there are some obvious downsides as well concerning risk management. To quote Levine directly here, "How will the NDFIs find an extra $100 of loans to make? One obvious possibility is by making much worse loans. Another is by making fake loans."