The eight largest U.S. banks have dramatically shifted their lending portfolios away from traditional mortgages and consumer loans toward less-conventional forms of credit, including securities-based loans and lending to nonbank financial firms. Less-traditional loans now make up 12.6% of total assets at these global systemically important banks as of June 30, 2026, up from 10.1% a year earlier, according to a Federal Reserve Bank of St. Louis analysis published this month. The trend marks a fundamental restructuring of how America's biggest banks deploy capital, with this category of lending becoming their largest loan type by the end of 2019.

The data breakdown shows the scale of the transformation over the past 15 years. Residential real estate lending at the eight U.S.-based GSIBs—Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street, and Wells Fargo—dropped to 5.8% of total assets by June 30, 2026, down from 11.7% as of June 30, 2011. Consumer loans fell even more sharply over the same period, declining to 4.2% of total assets from 7.2%. Meanwhile, less-traditional loans have more than doubled their share, climbing from just 5.4% of total assets in June 2011 to the current 12.6%. The "all other" lending subcategory, which includes securities-based loans, jumped to 6.6% of total assets by June 30, 2026, after historically hovering around 5%.

The analysis identifies two primary drivers behind the surge in nontraditional lending. Lending to nondepository financial institutions—indirect credit extended to consumers and businesses through mortgage companies, insurance firms, and private credit and equity funds—has powered growth in the broader category for years, but accelerated substantially in 2025 alongside major asset reclassifications from other loan categories throughout that year, according to Federal Reserve Board of Governors data notes cited in the report. Securities-based lending has also recently accelerated, driven by growth in loans for purchasing or carrying securities, such as margin loans and securities-based lines of credit that can't be used to buy securities.

The report attributes the recent jump in securities-based lending to higher stock market valuations, creating a direct link between equity prices and bank balance sheets. As stock portfolios grow in value, they can support larger secured loans, enabling investors to borrow against their holdings. This creates a feedback loop where rising markets fuel more lending, which in turn amplifies exposure to market volatility. The shift away from traditional consumer and mortgage lending means the nation's most systemically important banks now carry portfolios weighted more heavily toward financial institutions and securities markets than toward household borrowers, fundamentally altering the risk profile of institutions designated as globally critical to financial stability.