Non-bank financial institutions are increasingly posing risks to America’s big banks, as highlighted by economists in a New York Fed blog post. During market stress, non-banks’ demand for liquidity from banks can amplify financial shocks, potentially necessitating mass intervention by authorities. With non-banks operating under less stringent regulations, the interconnectedness between banks and non-banks has intensified, with risk correlation rising from 65% pre-2008 to over 80% now. The commercial real estate sector, with significant upcoming mortgage maturities amid rising vacancies and high interest rates, exemplifies this growing risk.