Word: nonbanker
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Dates: during 1990-1999
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...government's concern fully justified? Who really needs banks these days? Hardly anyone, it turns out. While banks once dominated business lending, today nearly 80% of all such loans come from nonbank lenders like life insurers, brokerage firms and finance companies. Banks used to be the only source of money in town. Now businesses and individuals can write checks on their insurance companies, get a loan from a pension fund, and deposit paychecks in a money-market account with a brokerage firm. "It is possible for banks to die and still have a vibrant economy," says Edward Furash, a Washington...
...business community has an even greater variety of nonbank choices to meets its financing needs. Blue-chip companies now turn elsewhere to borrow most of their money. Firms can raise short-term cash at lower rates by selling commercial paper; for longer-term money, they can issue bonds. Even small and medium-size firms, a vital source of business for banks, have many borrowing sources. The financing arms of General Electric, General Motors and Ford, which offer loans to businesses, are among the 10 largest financial institutions...
...role to play, but a far smaller one, since they are no longer the only game in town. Beset with an overhang of poor-quality loans from the 1980s and new challenges in all the bread-and-butter businesses, banks have lost their financial edge -- and then some. "The nonbank companies have smelled blood in the banking system, and they have moved in to gain market share," says Edward Yardeni, chief economist for the Wall Street firm C.J. Lawrence. "To survive, the banks are going to have to restructure, repair their balance sheets and drop in number closer...