Banking Law News

Wider Risk of Leveraged Loans Warrants Scrutiny, Tarullo Says

Oct. 30, 2018, 1:39 PM

Daniel Tarullo, the former Federal Reserve governor who transformed the way the U.S. central bank supervises Wall Street banks, called on regulators to scrutinize risky corporate lending markets and publish the results.

“We know more leveraged lending is being done outside the prudentially-regulated institutions,” Tarullo said in an interview earlier in October. That raises questions about “who owns this debt,” where the risks are and what funding streams “would have the potential to be cut off and result in a fire sale.”

“This is something the FSOC should be doing under any circumstance: doing an assessment and publicizing that assessment,”...

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