Risk Is Just Fine, U.S. Government Tells Wall Street Lenders
- U.S officials tell banks that leverage guidelines aren’t rules
- Reins are getting looser after a long period of credit growth
Pedestrians walk along Wall Street near the New York Stock Exchange (NYSE) in New York.
Photographer: Michael Nagle/BloombergThis article is for subscribers only.
The U.S. government is hammering home the message to Wall Street banks that it’s OK to dial up risk when lending to companies.
Two regulators, U.S. Comptroller of the Currency Joseph Otting and Federal Reserve Chairman Jerome Powell, separately said this week they are lightening up on guidelines that limited lending to companies with big debt loads. The comments follow an appeals court decision that looks set to make it cheaper for money managers to bundle corporate loans into bonds -- a ruling some say could increase the flow of credit for private equity buyouts and other highly indebted corporations.