Matt Levine’s Money Stuff: Private Credit Wants to Be the Bank

Programming note: This is the last Money Stuff of 2024. Happy holidays, and thanks so much for reading this year. We’ll be back on Monday, Jan. 6, 2025.

Narrow banking

One of the big stories of modern finance is the rise of narrow banking in the form of private credit. “Narrow banking” is, in banking theory, roughly the idea that banks shouldn’t make loans. Instead:

1. Banks should take money from depositors and keep it somewhere very safe. After all, the depositors might ask for their money back at any time, and it would be a crisis if the banks didn’t have it. ...