# Professors Richard Berner and Kim Schoenholtz offer thoughts on banking, capital markets and the Fed’s response to COVID-19

1 Faculty News July 25, 2020 ![The Economist logo](/sites/default/files/styles/246w/public/assets/images/uat_025662.jpg?itok=1_MW1PTy)>

Excerpt from [The Economist](https://www.economist.com/finance-and-economics/2020/07/25/banks-lose-out-to-capital-markets-when-it-comes-to-credit-provision) -- "As banks have grown risk-averse, non-banks, often tech-savvy, are stepping up. 'When you regulate the banks and you leave the rest of the financial system more lightly regulated, there will be regulatory arbitrage,' says [Richard Berner](https://www.stern.nyu.edu/faculty/bio/richard-berner) of New York University. 'But technology has also facilitated a shift because, particularly in the past decade, it has promoted the growth of payments and of bank-like activities outside the banking system.'

The Fed was able to soothe investors through the power of its announcements; it has so far lent only $100bn through its schemes. But Stephen Cecchetti and [Kermit Schoenholtz](https://www.stern.nyu.edu/faculty/bio/kim-schoenholtz), two scholars, have calculated the scale of each of the implicit guarantees."

[Read More](https://www.economist.com/finance-and-economics/2020/07/25/banks-lose-out-to-capital-markets-when-it-comes-to-credit-provision)