{"id":"c6df579df29dad00be4e14fb64797e0d523447f249e492a0654e85507443e045","title":"Nicola Cetorelli and Shohini Kundu argue in Liberty Street Economics that bank safety can hide wider fragility","argument":"The post by Nicola Cetorelli and Shohini Kundu was published July 17, 2026. It concludes a series on how bank regulation interacts with banking firms’ structure. The authors argue that Basel III made bank subsidiaries safer, but that some of this improvement came from shifting equity out of nonbank affiliates within the same holding companies. As their equity buffers thinned, the affiliates moved toward more leveraged lending; the authors report that loan delinquencies, loss provisions and earnings volatility rose, while measures of resilience worsened.\n\nThe authors argue that risks can travel back to banks through parental support commitments and direct financial claims on affiliates. 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Smallest repair: finish it as \"distributed across the broader organization.\" A brief plain-language gloss of \"nonbank affiliates\" within a bank holding company would also help general readers.","excerpt":"Understanding financial stability therefore requires looking beyond the regulated bank itself to how capital and risk are distributed across the broader organization."},{"dimension":"date","status":"pass","explanation":"July 17, 2026 matches originalPublished (2026-07-17T11:00Z, UTC day) and the post's dateline. modifiedAt is the same day, and the reading relies on nothing after that date. 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