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But then these lending firms will ultimately be put under the same regulation as banks - requiring them to hold capital against unexpected losses, comply with c

• dragonwriter 12y ago
  > But then these lending firms will ultimately be put under the same regulation as banks Why would they be? The regulations you refer to aren't about banks-as-lenders, they are about banks-as-depository-institutions which provide the service of absorbing default risk between capital providers (depositors) and borrowers. If given an alternative which provides the capital providers with a service which handles management of the details of lending without absorbing default risk (and without charging a premium for absorbing default risk) becomes popular as an alternative to depository accounts for long-term savings (rather than keeping liquidity as one would in a checking account), why would those alternatives be subject to regulations whose only purpose is to make sure that banks actually do perform the function of absorbing default risk for which they are charging depository customers? Those regulations only make sense in the context of a depository institution.