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August 20, 2024
Federal Reserve Board of Governors
Attn: Ann E. Misback, Secretary of the Board
Mailstop M-4775
2001 C Street NW
Washington, DC 20551
Office of Management and Budget
Attn: Office of Management and Budget Desk Officer for the Federal Reserve Board
Office of Information and Regulatory Affairs
New Executive Office Building, Room 10235
725 17th Street NW
Washington, DC 20503
Re:

Proposed Agency Information Collection Activities Comment Request; FR Y-14A/Q/M;
OMB No. 7100-0341; Document Number 2024-13798; 89 FR 52042 (June 21, 2024)

Dear Ladies and Gentlemen:
Better Markets1 appreciates the opportunity to comment on the proposed requirements
✁P✂✄☎✄✆✝✞✟✠ for enhanced regulatory reporting of lending to nondepository financial institutions
✁✡✄✡☛✝✡☞✆✟✠ on the Capital Assessments and Stress Testing information collection ✁✌✍ ✎-✏✑✟✠
reports ✒✄ ✒✓✔ ✌✔✕✔✂✝✞ ✍✔✆✔✂✖✔ ✗✄✝✂✕ ✄✘ ✙✄✖✔✂✡✄✂✆ ✁✌✔✕✟✠✚2
Currently, there is far too little information collected and made available to regulators and
the public about ☛✝✡☞✆✛ lending to nonbanks. The Proposal would address this deficiency by
expanding the ✌✔✕✛✆ ✔✜✢✆✒✢✡✣ reporting requirements for the FR Y-14 reports. It would apply to FR
Y-14 filers✤bank holding companies, savings and loan holding companies, and intermediate
holding companies with at least $100 ☛✢✞✞✢✄✡ ✢✡ ✒✄✒✝✞ ✝✆✆✔✒✆ ✁✘✢✂✥✆✟✠ and become effective for the
September 30, 2024, quarterly submissions.

1

Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008
financial crisis to promote the public interest in the financial markets, support the financial reform of Wall
Street, and make our financial system work for all Americans again. Better Markets works with allies✦
including many in finance✦to promote pro-market, pro-business, and pro-growth policies that help build a
✧★✩✪✫✬✭✩✮ ✧✯✰✭✩ ✰✱✫✯✫✲✱✯✳ ✧✴✧★✭✵ ★✶✯★ ✷✩✪★✭✲★✧ ✯✫✸ ✷✩✪✵✪★✭✧ ✹✵✭✩✱✲✯✫✧✺ ✻✪✼✧✮ ✧✯✽✱✫✬✧✮ ✩✭★✱✩✭✵✭✫★✧✮ ✯✫✸ ✵✪✩✭✾

2

Proposed Agency Information Collection Activities Comment Request; FR Y-14A/Q/M; OMB No. 71000341; Document
Number
2024-13798;
89
FED. REG.
52042
(June 21,
2024),
https://www.federalregister.gov/documents/2024/06/21/2024-13798/proposed-agency-informationcollection-activities-comment-request.

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Board of Governors of the Federal Reserve System and U.S. Office of Management and Budget
August 20, 2024
Page 2

Collecting additional data is needed for three main reasons:
1. the population of nonbanks is broad and includes a heterogeneous set of entities that
comprise a substantial and important share of the US financial system; more data will
allow for a better understanding of the risks associated with bank lending to nonbanks;
2. lending to nonbanks✤and therefore the associated risk✤has grown substantially; and
3. lending to nonbanks✤and the associated risk✤is concentrated among some of the
largest and most systemically important firms.
For these reasons, we fully support the Proposal and urge the Fed to implement the new
data collection as planned on September 30, 2024. Obtaining more granular data on lending to
nonbanks will enable the Fed to better understand firm✆✛ exposure to nonbanks and the risks
associated with this activity. With this understanding, the Fed can work to properly regulate and
supervise these exposures and protect our financial system and the American people.
We also believe that the Proposal could be strengthened in the following ways that are
discussed further below:
1. Maintain regulatory awareness of outsized nonbank lending concentrations among
firms with total assets below $100 billion, as these could also threaten financial
stability.
2. Make the data publicly available so that members of the public as well as regulators
can understand risks at the largest, systemically important firms.
BACKGROUND
Nonbanks are defined by the Financial Stability Board ✁✌ ✗✟✠ as financial companies that
are not central banks, banks, or public financial institutions.3 The term includes a wide range of
entities such as insurance companies, mortgage companies, private equity funds, hedge funds,
broker-dealers, and many more. Even with a slight decline in 2022, the FSB estimated that
nonbanks collectively have more than $200 trillion in total assets and account for about half of
global financing activities (see Chart 1).4 Furthermore, s✢✡✁✔ ✂✄✏✂☎ ✡✄✡☛✝✡☞✆✛ ✆✓✝✂✔ ✄✘ ✣✞✄☛✝✞
5
✝✆✆✔✒✆ ✓✝✆ ✢✡✁✂✔✝✆✔✕ ✆✓✢✞✔ ☛✝✡☞✆✛ ✆✓✝✂✔ ✓✝✆ ✕✔✁✞✢✡✔✕.

3

FINANCIAL STABILITY BOARD, GLOBAL MONITORING REPORT ON NON-BANK FINANCIAL INTERMEDIATION 3
(Dec.
18,
2023),
https://www.fsb.org/2023/12/global-monitoring-report-on-non-bank-financialintermediation-2023/.

4

Id. at 7.

5

Viral V. Acharya, Nicola Cetorelli, & Bruce Tuckman, Where Do Banks End and NBFIs Begin?, NBER
Working Paper 32316, at 1 (Apr. 2024), https://www.nber.org/system/files/working_papers/
w32316/w32316.pdf.

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Board of Governors of the Federal Reserve System and U.S. Office of Management and Budget
August 20, 2024
Page 3

Chart 1

1

Includes data for Russia up until 2020. 2 Nonbank financial intermediation (NBFI) includes insurance corporations, pension funds,
other financial intermediaries, and financial auxiliaries. 3 All deposit-taking corporations.

Banks✤especially ✣✞✄☛✝✞ ✆ ✆✒✔✥✢✁✝✞✞ ✢✥☎✄✂✒✝✡✒ ☛✝✡☞✆ ✁✙ ✁✗✆✟✠✤lend to nonbanks to
finance and facilitate their operations. Lending to nonbanks has increased dramatically and
outpaced all other major loan categories in recent years.6 In its Financial Stability Report, the Fed
reported that credit commitments to nonbanks exceeded $2 trillion in 2023 (see Chart 2).7 Simply
put, banks and nonbanks have become increasingly interconnected; the rapid growth of nonbanks
directly depends on funding from banks.8 At the same time, stress at nonbanks can be directly
transferred to banks through these funding linkages.9

6

See, e.g., FEDERAL DEPOSIT INSURANCE CORPORATION, RISK REVIEW 53 (2024),
https://www.fdic.gov/system/files/2024-07/2024-risk-review-full.pdf; Proposed Agency Information
Collection Activities Comment Request; OCC 1557✂0081; Document Number 2023-28473; 88 FED. REG.
89489 (Dec. 27, 2023), https://www.federalregister.gov/documents/2023/12/27/2023-28473/proposedagency-information-collection-activities-comment-request; Better Markets Comment Letter, Proposed
Agency Information Collection Activities Comment Request (Feb. 26, 2024), https://bettermarkets.org/wpcontent/uploads/2024/02/Better-Markets-Comment-Letter-Nonbank-Data-Collection.pdf.

7

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, FINANCIAL STABILITY REPORT 34 (Apr. 2024),
https://www.federalreserve.gov/publications/files/financial-stability-report-20240419.pdf.

8

Viral V. Acharya, Nicola Cetorelli, & Bruce Tuckman, Nonbanks Are Growing but Their Growth Is Heavily
Supported by Banks, FEDERAL RESERVE BANK OF NEW YORK: LIBERTY STREET ECONOMICS (June 17, 2024),
https://libertystreeteconomics.newyorkfed.org/2024/06/nonbanks-are-growing-but-their-growth-is-heavilysupported-by-banks/.

9

Id.

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Board of Governors of the Federal Reserve System and U.S. Office of Management and Budget
August 20, 2024
Page 4

Chart 2

About one-quarter of ☛✝✡☞✆✛ credit commitments to nonbanks are in the form of
outstanding term loans to nonbanks and three-quarters of the exposure is in the form of committed
but undrawn credit lines to nonbanks.10 ✁✡ ✄✒✓✔✂ ✆✄✂✕✆☎ ✘✢✂✥✆✛ ✔✜☎✄✆ ✂✔✆ ✒✄ ✡✄✡☛✝✡☞ ✞✔✡✕✢✡✣ ✁✄ ✞✕
increase substantially if nonbanks draw on committed lines. However, even at current levels,
concentrations are sizable, with term loans to nonbanks representing more than 25% of total term
loans in 2023, up from nearly 0% in 2013 (see Chart 3).11
Chart 3

10

Id.

11

Id.

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Board of Governors of the Federal Reserve System and U.S. Office of Management and Budget
August 20, 2024
Page 5

Lending to nonbanks is concentrated among the largest and most systemically important
banks. In 2023, nonbank lending exceeded 50% of U.S. GSIB✛✆ Tier 1 capital, up from around 5%
in 2010 (as indicated by the beige solid line at the top of Chart 4).12 Lending to nonbanks has also
increased substantially among other large banks that are not GSIBs (as indicated by the dark blue
solid line in the middle of Chart 4) but has stayed relatively low and stable among community
banks (as indicated by the light blue dashed line at the bottom of Chart 4).
Chart 4

While nonbanks have grown to be sizable players in the global financial ecosystem, they
have also proven to be risky, volatile, and opaque. The unprecedented amount of emergency
lending and financial support by the Federal Reserve and the U.S. Treasury extended to
nonbanks✤money market mutual funds, broker-dealers, the commercial paper market, and many
more✤in the aftermath of the COVID-19 pandemic proved how rapid and severe dislocations in
the nonbank landscape can be. It also demonstrated the threat that these entities can pose to
financial and economic stability.13 The enormous support provided to nonbanks clearly reflected
12

FEDERAL DEPOSIT INSURANCE CORPORATION, supra note 6 at 54.

13

See, e.g., Dennis Kelleher & Phillip Basil, ✁✂ ✄☎✆✝✂✞✟✠☎✡ ☛✞☎✡✂✝✟ ☞✌ ✍✁✂ ✎☎✝✂✡✏✑✞✍✂✒ ✓✔✁✞✒☞✕ ✖✞☎✗✠☎✡✘
Financial
Sector,
Better
Markets
(Mar.
24,
2022),
https://bettermarkets.org/wpcontent/uploads/2022/03/BetterMarkets_Report_Dangers_of_the_Shadow_Banking_System_March2022.p
df; Richard H. Clarida, Burcu Duygan-Bump, & Chiara Scotti, The COVID-19 Crisis and the Federal
✙✂✟✂✝✚✂✛✟ ✜☞✑✠✆✢ ✙✂✟✣☞☎✟✂, Board of Governors of the Federal Reserve System, FIN. AND ECON. DISCUSSION
SERIES 2021-035 (2021), https://www.federalreserve.gov/econres/feds/files/2021035pap.pdf; Eric Milstein
& David Wessel, What Did the Fed Do In Response to the COVID-19 Crisis?, BROOKINGS INST. (Jan. 2,
2024), https://www.brookings.edu/articles/fed-response-to-covid19/.

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Board of Governors of the Federal Reserve System and U.S. Office of Management and Budget
August 20, 2024
Page 6

✁ ✥✝☞✔✂✆✛

these entities were indeed systemically significant and the
expenditure of large amounts of public resources was necessary and appropriate to protect the
banking system and economy more broadly from the consequences of a nonbank collapse.
☎✄✞✢

✕✣✥✔✡✒ ✒✓✝✒

L✢☞✔ ✝✡ ✔✜☎✄✆ ✂✔ ✆✢✒✓✢✡ ☛✝✡☞✆✛ lending portfolio, the inherent risk of nonbanks will
transfer back to the banks, ultimately endangering financial stability, if nonbanks end up in
distress, become unable to repay loans, face liquidity crises, or fail. Researchers from the Bank for
International Settlements ✁✗✁ ✟✠ summarize:
[L]iquidity provision by non-banks tends to be more opportunistic and more prone
to evaporate at times of stress, with entities that generally provide liquidity
suddenly turning into liquidity consumers. . . .
These structural shifts mean that liquidity imbalances have the potential to greatly
affect prices and, in extreme cases, endanger financial stability✚ ✁✓✔ ✂✕✝✆✓ ✘✄✂
✁✝✆✓✛ ✒ ✂✥✄✢✞ ✝✒ ✒✓✔ height of the Covid-19 crisis (when investors shifted away from
risky assets to cash-like assets on a massive scale) painfully exposed such structural
[nonbank] vulnerabilities and spillovers that affected other participants in the
✘✢✡✝✡✁✢✝✞ ✆ ✆✒✔✥✚ ✄✞✒✢✥✝✒✔✞ ☎ ✢✒ ✆✝✆ ✄✡✞ ✁✔✡✒✂✝✞ ☛✝✡☞✆✛ flexible use of their balance
sheets that arrested the adverse feedback loops and helped to restore market
functioning.14
Put differently, without central bank intervention, numerous nonbanks would likely have
collapsed during the pandemic, which could have at best stressed banks and at worst, caused a
contagion of failures inevitably leading to crises, crashes, and even larger bailouts. It is, therefore,
critical to have appropriate data and tools to identify, understand, and manage the accumulation of
risky activities including bank lending to nonbanks before it reaches dangerous levels, which is
why this Proposal is so important.
SUMMARY OF THE PROPOSAL
The Proposal would increase the granularity of required firm reporting to provide the Fed
with a better understanding of the nature of nonbank lending exposures. Currently, the reporting
on the FR Y-14 report that is required by firms✛ nonbank loans is limited, relative to the required
reporting on corporate loans to nonfinancial businesses. This information gap impedes ✒✓✔ ✌✔✕✛✆
ability to measure, monitor, and understand these nonbank exposures.15
Specifically, the Proposal would make two changes:
1. Substantially increase required reporting on nonbank loans, adding about 30 data elements
from the balance sheet and income statement of nonbank borrowers to characterize the
14

Sirio Aramonte, Andreas Schrimpf, & Hyun Song Shin, Non-Bank Financial Intermediaries and Financial
Stability, Bank for International Settlements Working Papers, No. 972, at 2-3 (Oct. 29, 2021),
https://www.bis.org/publ/work972.htm (emphasis added).

15

Proposed Agency Information Collection Activities Comment Request, supra note 2 at 52046.

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Board of Governors of the Federal Reserve System and U.S. Office of Management and Budget
August 20, 2024
Page 7

financial health of the nonbank obligor or entity that is the primary source of repayment
for the loan; and
2. Add a data field to the required reporting to further classify the nonbank entity type.16
As detailed earlier, the changes would be implemented beginning with the September 30,
2024, FR Y-14 reports.17
SUMMARY OF COMMENTS
We strongly support the addition of increased reporting on nonbank lending on the FR Y14 for several reasons, as detailed earlier. Rapid growth in the nonbank lending sector, the resulting
concentrations of lending to nonbanks among the largest and most systemically important firms,
the inherent risk and volatility of the nonbank sector, and the potentially substantial negative
impact on the broader financial system and economy all reinforce the need for more granular bank
reporting. The enhanced transparency that the Proposal will bring will improve the ability of
regulators to identify and address, as necessary, the accumulation of dangerous concentrations of
✂✢✆☞ ✂✔✞✝✒✔✕ ✒✄ ✘✢✂✥✆✛ ✞✔✡✕✢✡✣ to nonbanks.
Furthermore, we recommend the Fed take additional actions to promote financial stability:
Maintain regulatory awareness of outsized nonbank lending concentrations among
banks with total assets below $100 billion, as these could also threaten financial
stability. The Proposal would require additional reporting related to nonbank lending
by all firms that file FR Y-14 reports. This framework will capture a significant share
of the total lending to nonbanks. However, given the risk and volatility in the nonbank
sector, financial regulators must also remain aware of any banks below the $100 billion
asset threshold that develop material concentrations in nonbank lending and require
closer scrutiny. Smaller banks typically have less experience and expertise and
therefore may be less able to manage the risks of nonbank lending. Moreover, a better
understanding of the risks stemming from nonbanks would be facilitated by requiring
these data from a broader group of banks providing funding to nonbanks.
Make the FR Y-14 data on nonbank lending publicly available so that members of the
public as well as regulators can understand risks at the largest, systemically important
firms. Currently, the FR Y-14 data are not publicly available; instead, high-level charts
are only occasionally included in Fed reports. Given that nonbank lending has grown
substantially and has been identified as a risk by the Financial Stability Oversight
Council ✁✌ ✁✂✟✠, it is increasingly necessary to make this reporting public.

16

Id.

17

Proposed Agency Information Collection Activities Comment Request, supra note 2 at 52043.

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Board of Governors of the Federal Reserve System and U.S. Office of Management and Budget
August 20, 2024
Page 8

COMMENTS
I.

MAINTAIN REGULATORY AWARENESS OF OUTSIZED NONBANK
LENDING CONCENTRATIONS AMONG BANKS WITH TOTAL ASSETS
BELOW $100 BILLION, AS THESE COULD ALSO THREATEN FINANCIAL
STABILITY.

As explained earlier, nonbanks are a large, risky, and volatile segment of the financial
system. Bank lending to nonbanks exposes the banks to this risk and volatility. The purpose of
collecting additional data is to understand this exposure and limit or contain the resulting systemic
vulnerabilities.
As shown in Chart 4, the largest banks indeed have the most exposure to nonbank lending.
✁✓✔✂✔✘✄✂✔☎ ✆✔ ✆ ☎☎✄✂✒ ✒✓✔ ✂✄☎✄✆✝✞✛✆ standard that firms with $100 billion or more in total assets
would be required to report more granular data on nonbank lending. However, given the risk and
volatility in the nonbank sector, financial regulators must also remain aware of banks below the
$100 billion size threshold that develop material concentrations in nonbank lending. Smaller banks
typically have less experience and expertise, so additional regulatory attention is required to ensure
these banks appropriately manage the risks they take on.
II.

MAKE THE FR Y-14 DATA ON NONBANK LENDING PUBLICLY AVAILABLE
SO THAT MEMBERS OF THE PUBLIC AS WELL AS REGULATORS CAN
UNDERSTAND RISKS AT THE LARGEST, SYSTEMICALLY IMPORTANT
FIRMS.

Currently, the FR Y-14 data on bank lending to nonbanks are not publicly available and
this lack of transparency detracts from the goal of promoting financial stability. It is true that a
limited number of charts displaying nonbank lending data in aggregate form appear in certain Fed
reports, such as Chart 2 in this letter which comes from the ✌✔✕✛✆ annual Financial Stability
Report.18 Additionally, the Federal Reserve Bank of New York has developed research and other
resources related to nonbanks.19 These resources are certainly valuable, but consistent publicly
available reporting would be much better and more supportive of financial stability.

18

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, supra note 7.

19

FEDERAL
RESERVE
BANK
OF
NEW
YORK,
NONBANK
FINANCIAL
https://www.newyorkfed.org/nonbank-financial-institutions (last visited Aug. 14, 2024).

INSTITUTIONS,

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Board of Governors of the Federal Reserve System and U.S. Office of Management and Budget
August 20, 2024
Page 9

Notably, the Fed has made an institutional commitment to provide greater transparency
around confidential regulatory data from the FR Y-14 reports for other credit portfolios
namely credit card lending and mortgage lending. The Federal Reserve Bank of Philadelphia
hosts a dedicated website containing quarterly data, charts, and analysis on credit card and
mortgage lending.20 Therefore, it is clear that the Fed recognizes the value of the transparency that
this resource provides. Transparency supports financial stability. It is not enough to collect data,
lock it away, and only provide a select few people with the key.
Finally, the FSOC continues to identify risks related to nonbanks21 and its authority to
protect the financial system from nonbank threats was recently reinstated.22 We strongly encourage
the Agencies that comprise the FSOC to use this authority and get back to the business of
identifying systemically important nonbank financial institutions and designating them as such so
✒✓✝✒ ✒✓✔

✆✢✞✞ ☛✔ ☛✂✄ ✣✓✒ ✕✢✂✔✁✒✞

✢✡✒✄ ✒✓✔ ☎✔✂✢✥✔✒✔✂ ✄✘ ✒✓✔ ✌✔✕✔✂✝✞ ✍✔✆✔✂✖✔✛✆ ✂✔✣ ✞✝✒✄✂

✝✡✕

supervisory oversight. It will be critical for all financial regulators, not just the select few that
currently have access to the confidential FR Y-14 information, as well as the public, to have access
to information on bank lending to nonbanks, both in aggregate and for individual firms to
understand concentrations and exposures that have systemic risk implications.

20

FEDERAL RESERVE BANK OF PHILADELPHIA, LARGE BANK CREDIT CARD AND MORTGAGE DATA,
https://www.philadelphiafed.org/surveys-and-data/large-bank-credit-card-and-mortgage-data (last visited
Aug. 14, 2024).

21

See, e.g., FINANCIAL STABILITY OVERSIGHT COUNCIL, REPORT ON NONBANK MORTGAGE SERVICING (2024),
https://home.treasury.gov/system/files/261/FSOC-2024-Nonbank-Mortgage-Servicing-Report.pdf.

22

See, e.g., Press Release, U.S. Department of the Treasury, FSOC Approves Analytic Framework for Financial
Stability Risks and Guidance on Nonbank Financial Company Determinations (Nov. 3, 2023),
https://home.treasury.gov/news/press-releases/jy1876; Press Release, Better Markets, We Applaud the

✛✟ ☛✂✆✠✟✠☞☎ ✍☞ ✙✂✠☎✟✍✞✍✂ ☎✏✍✁☞✝✠✍✢ ✍☞ ✆☎✒ ✔✢✟✍✂✝✠✆ ✁✝✂✞✍✟ ✌✝☞✝✞☞☎✟✞☎✗✟✠✞☞✕ ✄✍ ✡✏✟✍ ☎✆✍ ✍☞ ☎✆✍✏✞✑✑✢
✁End✔✂✄Them
(Nov. 3, 2023), https://bettermarkets.org/newsroom/we-applaud-the-fsocs-decision-to-reinstateauthority-to-end-systemic-threats-from-nonbanks-now-it-must-act-to-actually-end-them/.

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