OCC Rule Shift Raises Leveraged Lending Risk for Banks and Nonbanks

OCC and FDIC Withdraw From Leveraged Lending Guidance

Banks subject to the Agencies’ jurisdiction will now be expected to manage leveraged lending using general risk management principles for safe and sound lending.By Arthur S. Long, Pia Naib, and Deric BeharKey Points: The withdrawal of prescriptive 2013 Guidance allows supervised banking institutions to engage in leveraged lending according to their own risk management practices in alignment with broader principles of safety and soundness. Banks …

OCC Rule Shift Raises Leveraged Lending Risk for Banks and Nonbanks

Nonbanks expanded sharply in corporate credit during the past decade, and this growth coincided with a market in which leverage steadily moved higher. Private credit funds and finance companies have became central players as banks faced new rules on leverage. New regulatory changes now set the stage for another shift. Nonbanks Grew as Leverage Increased Research from the Journal of Banking & Finance shows how the leveraged loan market …