Federal Reserve Bank of New York · Nov 18, 2025
Nicola Cetorelli and Saketh Prazad argue in Liberty Street Economics that U.S. banks expanded beyond traditional banking
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Nicola Cetorelli and Saketh Prazad published this post on November 18, 2025. They argue that the traditional picture of banks as institutions that take deposits and make loans misses how U.S. bank holding companies (BHCs) have expanded into nonbank financial institutions (NBFIs). Drawing on financial filings and organizational data, they describe nonbank subsidiaries across activities including lending, securities, insurance, and investment funds. Their evidence indicates that this expansion was not confined to the largest banks: nonbank holdings were widespread among the top 200 BHCs, and BHC-affiliated NBFIs made up a substantial share of the NBFI industry. The authors’ larger point is that, when regulatory restrictions allow, banking firms expand their boundaries to include specialized institutions engaged in financial intermediation. That challenges the textbook image of a bank as only a deposit-taking and loan-making institution. The post leaves open why so many banks pursued this expansion; the authors say they address that question in a following post.
Headline and summary by Escape Meridian, prepared by Luna from the attributed source. A source check is not independent confirmation of the source’s claims.
Original source
Federal Reserve Bank of New York · Article
Source details
Original source date: Nov 18, 2025 (2025-11-18T12:00:00.000Z).
Date basis: Date supplied by the publisher’s feed.
Added to Escape Meridian: 2026-11-10T01:08:25.319Z. First observed: 2026-10-29T19:46:10.618Z. Retrieved: 2026-10-29T19:47:51.789Z.
Referenced by
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No public references recorded here yet.
Limits
Text as retrieved on October 29, 2026; originally published November 18, 2025. The post presents evidence about the scope and prevalence of BHCs’ nonbank activities, but leaves the reasons banks pursued this expansion for a following post. The reported charts and tables draw on different samples and periods, as specified in the post; they do not describe a single uniform .
Open question
What explains banks’ decisions to bring a wide range of nonbank financial activities within their organizational boundaries?
Source-stated
Cetorelli and Prazad argue that deposit-taking and loan-making alone do not accurately characterize U.S. banking operations in recent decades.
deposit-taking and loan-making have not accurately characterized U.S. banking operations in recent decades.
Source-stated
The authors report that BHCs expanded into a wide range of nonbank activities, including investment funds, securities dealers, insurers, and specialty lenders.
Since the 1980s, BHCs have been adding NBFI subsidiaries representing the full array of intermediation activities, including investment funds, securities dealers, insurers, and specialty lenders.
Source-stated
The authors say nonbank holdings were widespread among the largest BHCs, rather than limited to a handful of them.
the expansion of the nonbank footprint has been a widespread phenomenon.
Source-stated
The authors conclude that, absent regulatory restrictions, banking firms naturally expand to include specialized institutions engaged in financial intermediation.
banking firms will naturally expand their boundaries to include any relevant type of specialized institution engaging in financial intermediation.
Source-stated
The post leaves the reasons for banks’ expansion as an open question and says the authors will examine it in a following post.
But why have so many banks pursued a strategy of business scope expansion, and by including many NBFI subsidiaries under their organizational umbrellas? We delve deeper into this important question in the next post.
Source and contributor context
Federal Reserve Bank of New York · Publisher
The publisher is identified here. No individual author has been inferred.
Source media
Media retrieval status: unchecked.
Terms and references
Reference context selected by Escape Meridian; separate from source evidence. Entity mentions do not establish authorship, involvement or endorsement.
Time-series
Observations arranged over time, such as monthly sales; forecasting uses their patterns to estimate later values.
Editorial provenance
Version 1. Publication ID: 714eae8e-ef3a-6522-6a46-8757271d17aa.
Prepared by openai/gpt-6-luna; grounding review by anthropic/claude-opus-5.5.
Source check: passed by anthropic/claude-opus-5.5 on 2026-11-10T01:04:01.560Z. This checks fidelity to the source, not whether its claims are independently true.
Editorial selection: accept; reasons: bridge_admitted_by_model.
Observation: a500e403f389ef8bded3f2ac4bf952a651978b04f1d23f523f9e65471412e78a. Source text hash: 3aa7fdd4b9704dd41f691fb4db60a6ff7e99a79a16ef1b73fb3debc7e24a5fb8.
Revision and source-check history
Version 1 · 2026-11-10T01:08:25.319Z
Nicola Cetorelli and Saketh Prazad argue in Liberty Street Economics that U.S. banks expanded beyond traditional banking
Nicola Cetorelli and Saketh Prazad published this post on November 18, 2025. They argue that the traditional picture of banks as institutions that take deposits and make loans misses how U.S. bank holding companies (BHCs) have expanded into nonbank financial institutions (NBFIs). Drawing on financial filings and organizational data, they describe nonbank subsidiaries across activities including lending, securities, insurance, and investment funds. Their evidence indicates that this expansion was not confined to the largest banks: nonbank holdings were widespread among the top 200 BHCs, and BHC-affiliated NBFIs made up a substantial share of the NBFI industry. The authors’ larger point is that, when regulatory restrictions allow, banking firms expand their boundaries to include specialized institutions engaged in financial intermediation. That challenges the textbook image of a bank as only a deposit-taking and loan-making institution. The post leaves open why so many banks pursued this expansion; the authors say they address that question in a following post.
Original source
Federal Reserve Bank of New York · Article
Source details
Original source date: Nov 18, 2025 (2025-11-18T12:00:00.000Z).
Date basis: Date supplied by the publisher’s feed.
Added to Escape Meridian: 2026-11-10T01:08:25.319Z. First observed: 2026-10-29T19:46:10.618Z. Retrieved: 2026-10-29T19:47:51.789Z.
Limits
Text as retrieved on October 29, 2026; originally published November 18, 2025. The post presents evidence about the scope and prevalence of BHCs’ nonbank activities, but leaves the reasons banks pursued this expansion for a following post. The reported charts and tables draw on different samples and periods, as specified in the post; they do not describe a single uniform .
Open question
What explains banks’ decisions to bring a wide range of nonbank financial activities within their organizational boundaries?
Source-stated
Cetorelli and Prazad argue that deposit-taking and loan-making alone do not accurately characterize U.S. banking operations in recent decades.
deposit-taking and loan-making have not accurately characterized U.S. banking operations in recent decades.
Source-stated
The authors report that BHCs expanded into a wide range of nonbank activities, including investment funds, securities dealers, insurers, and specialty lenders.
Since the 1980s, BHCs have been adding NBFI subsidiaries representing the full array of intermediation activities, including investment funds, securities dealers, insurers, and specialty lenders.
Source-stated
The authors say nonbank holdings were widespread among the largest BHCs, rather than limited to a handful of them.
the expansion of the nonbank footprint has been a widespread phenomenon.
Source-stated
The authors conclude that, absent regulatory restrictions, banking firms naturally expand to include specialized institutions engaged in financial intermediation.
banking firms will naturally expand their boundaries to include any relevant type of specialized institution engaging in financial intermediation.
Source-stated
The post leaves the reasons for banks’ expansion as an open question and says the authors will examine it in a following post.
But why have so many banks pursued a strategy of business scope expansion, and by including many NBFI subsidiaries under their organizational umbrellas? We delve deeper into this important question in the next post.
Source and contributor context
Federal Reserve Bank of New York · Publisher
The publisher is identified here. No individual author has been inferred.
Source media
Media retrieval status: unchecked.
Terms and references
Reference context selected by Escape Meridian; separate from source evidence. Entity mentions do not establish authorship, involvement or endorsement.
Time-series
Observations arranged over time, such as monthly sales; forecasting uses their patterns to estimate later values.
Editorial provenance
Version 1. Publication ID: 714eae8e-ef3a-6522-6a46-8757271d17aa.
Prepared by openai/gpt-6-luna; grounding review by anthropic/claude-opus-5.5.
Source check: passed by anthropic/claude-opus-5.5 on 2026-11-10T01:04:01.560Z. This checks fidelity to the source, not whether its claims are independently true.
Editorial selection: accept; reasons: bridge_admitted_by_model.
Observation: a500e403f389ef8bded3f2ac4bf952a651978b04f1d23f523f9e65471412e78a. Source text hash: 3aa7fdd4b9704dd41f691fb4db60a6ff7e99a79a16ef1b73fb3debc7e24a5fb8.
passed · 2026-11-10T01:04:01.560Z · anthropic/claude-opus-5.5
Publication: 714eae8e-ef3a-6522-6a46-8757271d17aa
attribution — pass: The reading correctly credits Nicola Cetorelli and Saketh Prazad, writing in the Federal Reserve Bank of New York's Liberty Street Economics. The argument stays attributed to the authors throughout. The page is a single argued post, not a listing of other pieces.
Nicola Cetorelli and Saketh Prazad, “U.S. Banks Have Developed a Significant Nonbank Footprint,” Federal Reserve Bank of New York Liberty Street Economics
summary — pass: The reading leads with the authors' thesis and spells out BHCs and NBFIs. It covers the main evidence: the range of activities, how widespread the holdings are among the top 200 BHCs, and the share of the NBFI industry. It keeps the regulatory condition ('when regulatory restrictions allow') and the open question deferred to a later post. The title and question follow from the source. A general reader can follow the central actor and the claim.
absent regulatory restrictions, banks naturally expand their boundaries to include NBFI subsidiaries
date — pass: The stated date of November 18, 2025 matches evidence.originalPublished (UTC day) and the post's dateline. The evidence is a publisher page, so no archive disclosure is needed. The reading has no hindsight framing and presents no later events. The follow-up post is described only as the authors' stated plan.
November 18, 2025
support — pass: Each claim has a verbatim excerpt that supports it. The summary's mentions of filings and organizational data, the top 200 BHCs, and the substantial NBFI industry share are all grounded in the post. The reading infers no benefits or costs beyond the source. The limitation about differing samples and periods matches the chart and table notes.
The magnitude of these shares confirms that BHC-held NBFIs are an important segment of the financial intermediation industry.
media — pass: No media was selected and no verified candidates were supplied, so nothing is misidentified.
Challenge or correct this reading
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Observations arranged over time, such as monthly sales; forecasting uses their patterns to estimate later values.
Definition referenceObservations arranged over time, such as monthly sales; forecasting uses their patterns to estimate later values.
Definition reference