Dr. Martha O'Hagan-Luff:

I do not know about it being the norm but it could grow in importance. For example, the US funding model is quite different from the model in Europe and there is more direct funding in the US rather than indirect funding via a bank. I imagine there could be more of what we might call direct funding for developers and so on, especially for the size of borrowing that they need, given the type of liquidity. One could argue that the risk is better placed in that way. Our economy needs the retail banking system. If we do not have a functioning banking system, this has very negative consequences for the economy. If we have our retail banking system holding very risky assets, that is not good for the economy as a whole because we need our retail banks to be safe, to be secure, to be boring and to not be overly risky. If the risk was placed elsewhere, and if loans to developers which are deemed riskier go elsewhere, that could be a good thing, although I know the Senator was not asking whether it was a good or bad thing. It is a possibility and I would foresee there being more options going forward. If our retail banks are safer, I would say that is potentially a welcome development.