An article on barrons.com noted that, worldwide, “nonbank financial intermediaries, known colloquially as shadow banks” now hold about half of all financial assets.

Commercial banks often make loans to nonbank financial intermediaries. These firms sometimes use the loans to invest in assets that banking regulations don’t allow banks to invest in directly. The article noted that Federal Reserve Governor Michelle Bowman had argued in a speech that, as a result, “riskier activities pushed out of the banking system could come back to haunt banks.”

a. Give an example of a “nonbank financial intermediary.”

b. What does Bowman mean by riskier activities being pushed out of the banking system? How could such activities “come back to haunt banks”?