Government officials went head-to-head with banking executives in recent weeks demanding to know why huge loans to banks have failed to increase lending to consumers. However, banks countered by saying that they loaned as much or more than they did during the same time last year. So, who is lying and when will consumers be able to get loans?

The truth is that a lot of lending doesn’t come from banks, but rather so-called “shadow lenders” such as hedge funds and insurance companies. Often times, real estate developers, small business owners and others that need larger loans turn to these shadow lenders to cover their needs. Now, they are turning to banks to fill the void and taking up the credit traditionally used for consumers.

Unfortunately, the shadow banking system hasn’t recovered enough to pick up the slack and isn’t big enough to fill in the lack of supply in the lending markets. Meanwhile, banks are continuing to pull back on all types of lending in order to hold capital to help safeguard against future loan losses. They have also worked to increase fees to many of its clients, which has drawn consumer criticism.