The U.S. Securities and Exchange Commission is considering a rule that could make so-called shadow banking safer, Bloomberg News reported yesterday. Nonbanks argue that the rule will make it tougher for them to lend to small- and mid-sized businesses. Small businesses account for more than six out of 10 new private-sector jobs. However, the SEC is wary that business-development companies will get in trouble by using too much borrowed money to boost returns. Shadow banks have been picking up the slack since international regulators saddled traditional banks with stricter capital constraints following the 2008 financial crisis. Lending by nonbanks to small- and middle-market businesses, which is considered riskier than loans to big corporations, has mushroomed to more than $70 billion, according to the Small Business Investor Alliance.
