To others, they are mongrel institutions born of efforts to evade legitimate stric- tures imposed by congressional intent as well as a threat to the interests of the traditional banks and their customers. Toward that end, this study defines nonbank banks and describes the regulation to which they are subject. The objections of those who oppose nonbank banks are outlined, as are the arguments of those who own such banks. The relevance of nonbank banks to the broader debates over interstate banking and the powers exercised by depository institutions is also detailed. As complicated as the nonbank bank issue is, the existence of such banks is not the real problem faced by Congress, the federal regulators, and the banking industry.
Nonbank banks are a symptom of a much more serious malaise.
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