If you follow mainstream media and analysis from large investment banks, you will probably notice that many pundits are saying that robust lending growth is one of the factors supporting the US economy. According to this view, stronger credit growth helps offset weak consumer sentiment and subdued business expectations.Indeed, if we look at headline growth in 2025, it was fairly solid at around 5% YoY.Source: Financial TimesHowever, a closer look at this growth shows a completely different picture, and one that is concerning for both the US economy and the banking sector. In the reported data highlighted by the Financial Times, lending to shadow lenders appears to have accounted for essentially all US bank-lending growth in 2025.Source: Financial TimesThat is striking even for those of us who have consistently argued that lending to shadow banks is growing faster than conventional lending. Despite repeated warnings from regulators in the US and globally, bank exposure to shadow banking remains less transparent than traditional lending. Its capital treatment can also make it an attractive and profitable business for banks.According to a recent NY Fed report, about fifty US bank holding companies had total credit exposure to NBFI obligors - on-balance-sheet loans plus undrawn commitments - exceeding 100% of Tier 1 equity capital; the most extremely exposed banks reached four to six times that amount. Many were larger banks with assets of more than $10B.Shadow banking can combine limited transparency, illiquid assets, leverage, maturity mismatch and rapid growth - a potentially dangerous mix in periods of market stress.Recent failures involving Tricolor and First Brands highlight a central risk: collateral can be difficult to verify and, in alleged cases, may be pledged more than once or ultimately be worth less than lenders expect.Rapid growth and growing links to regulated banks should remain a significant financial-stability concern.Believe it or not, there are more major issues on the larger bank balance sheets as compared to smaller banks, which we have covered in past articles. Moreover, consider that there was one major issue which caused the GFC back in 2008, whereas today, we currently have many more large issues on bank balance sheets. These risk factors include major issues in commercial real estate, rising risks in consumer debt (approaching 2007 levels), underwater long-term securities, over-the-counter derivatives, high-risk shadow banking (the lending for which has exploded), and elevated default risk in commercial and industrial (C&I) lending. So, in our opinion, the current banking environment presents even greater risks than what we have seen during the 2008 GFC.Community banks do not have any of the issues. Of course, we’re not saying that all community banks are good. There are a lot of small community banks that are much weaker than larger banks. That’s why it’s absolutely imperative to engage in a thorough due diligence to find a safer bank for your hard-earned money. And what we have found is that there are still some very solid and safe community banks with conservative business models.So, I want to take this opportunity to remind you that we have reviewed many larger banks in our public articles. But I must warn you: The substance of that analysis is not looking too good for the future of the larger banks in the United States, and you can read about them in the prior articles we have written.Moreover, if you believe that the banking issues have been addressed, I think that New York Community Bank is reminding us that we have likely only seen the tip of the iceberg. And I can assure you that they have not been resolved. It’s now only a matter of time before the rest of the market begins to take notice. By then, it will likely be too late for many bank deposit holders.At the end of the day, we’re speaking of protecting your hard-earned money. Therefore, it behooves you to engage in due diligence regarding the banks which currently house your money.You have a responsibility to yourself and your family to make sure your money resides in only the safest of institutions. And if you’re relying on the FDIC, I suggest you read our prior articles, which outline why such reliance will not be as prudent as you may believe in the coming years, with one of the main reasons being the banking industry’s desired move towards bail-ins. (And, if you do not know what a bail-in is, I suggest you read our prior articles.)It’s time for you to do a deep dive on the banks that house your hard-earned money in order to determine whether your bank is truly solid or not.