However, given the growing role of capital markets and nonbank institutions in the intermediation process, we should begin to ask ourselves whether these broader market segments pose systemic concerns that are independent from those already arising from their linkages to the banking system.
The importance of maintaining financial stability and addressing systemic threats to the economy justifies the federal safety net and the need for prudential supervision. We have a long history of using prudential or safety and soundness supervision of the banking system to limit the potential risks to this safety net.