While corporate debt is at near-record levels and recent growth has been concentrated in riskier segments, “business debt does not appear to present notable risks to financial stability,” Federal Reserve Chairman Jerome Powell said today in Florida.
The rapid growth is attributable largely to nonbanks. Should this group of loans start underperforming, the risk to the banking sector is relatively low.
In the wake of the Federal Reserve’s biennial financial stability report released yesterday, which flagged leveraged loans as a risk factor, Fed Vice Chairman for Supervision Randal Quarles suggested that media reports overplayed the scale of the risk, especially to banks.
Credit standards for leveraged loans continued to deteriorate in recent months, with the share of newly issued large loans to highly leveraged corporations now exceeding peak levels, the Federal Reserve said today in its second report on financial stability. T
As part of its efforts to monitor and maintain financial stability, the Federal Reserve is proposing to include new categories of entities under “financial institution” status under the FDIC Improvement Act’s netting provisions, first promulgated in Regulation EE in 1994.
As part of their efforts to mitigate financial stability risks associated with connections among the largest banks, the federal banking agencies today proposed a rule that would discourage the largest banks from purchasing large amounts of total loss-absorbing capacity debt issued by other large banks.
Federal Reserve Vice Chairman for Supervision Randal Quarles today defended the agency’s decision to hold the countercyclical capital buffer for banking organizations using the Basel III advanced approaches at zero percent for the third year in a row, noting that financial vulnerabilities remain within their normal range.
Prominent on the Financial Stability Board’s 2019 agenda are the role of big technology firms in financial services and the growth of shadow banking, Federal Reserve Vice Chairman for Supervision Randal Quarles said in a speech in Germany today.
As part of its broad review of the post-crisis regulatory framework, the Basel, Switzerland-based Financial Stability Board today sought public feedback on the effects of post-crisis rules on credit for small and midsize enterprises.
The Federal Reserve on Friday issued its semiannual monetary policy report, just ahead of Fed Chairman Jerome Powell’s testimony before the Senate Banking Committee next week.