A spate of recent fraud cases and bankruptcies has raised new concerns about a growing class of largely unregulated loans, with a sell-off in U.S. banking stocks bleeding into global markets this week.

A pair of regional banks disclosed this week that they had suffered losses on allegedly fraudulent business loans, while the failure of two companies in the automotive sector dinged some Wall Street titans, including JPMorgan.

All four cases reflect the growth of major banks’ lending to so-called non-depository financial institutions, said Chris Marinac, an analyst with the financial advisory firm Janney Montgomery Scott. Also referred to as “private credit” or “shadow banking,” it’s an example of larger, regulated banks offering loans to private companies that in many cases have a higher

See Full Page