The wobble around Zions Bancorp and Western Alliance — alongside the failures of Tricolor and First Brands — points to a weakness that rarely gets daylight: banks lending to lenders (Report, FT.com, October 16).
This is not about big headline losses. The strain shows up when cash leaves exactly as liquidity dries up. An “unused” credit line at breakfast can be fully drawn by lunch. Prices slip, collateral calls increases, and what looked like someone else’s risk snaps back on to bank balance sheets.
Shadow finance now accounts for a large share of global assets, so its plumbing is everyone’s business. Dollar funding is the choke point in every global scare; when dollars tighten, even small strains travel far. And regional lenders feel the same news more sharply than giants because they run on thinner margins, local deposits and more concentrated books.
Simple, comparable disclosures would help. Separate exposures to non-banks show how much of those promised lines could be drawn at once, and spell out the quality and liquidity of the collateral behind them. If we want fewer outsized reactions to small numbers, we need to see the bridge between banks and the entities they fund, rather than guess its length after it buckles.
Lisa Grechi
Livorno, Italy
