Second, the instruments should not push banks to pass on their additional direct costs by turning deposit rates negative or increasing lending rates to increase margins. Both developments would be problematic for our monetary policy goals. Tier systems that simply pass direct costs at the margin can mitigate this concern but cannot dispel it altogether.
Thus, the act discourages the extension of bank-like regulation and supervision to nonbank affiliates and subsidiaries. The Federal Reserve can contribute to this goal by being clear in word and deed that the affiliation of nonbank entities with a bank does not afford them access to the safety net.