Federal financial agencies report that lending is becoming riskier

A joint report by the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency concludes that "[d]espite vigorous new regulatory controls adopted in the wake of the recent financial crisis, financial lending has only become riskier." The report cites banks' leveraged lending, which involves making a loan and then selling the debt to a third party, often an investment fund.

In general, banks are seeking higher returns and in return are accepting a higher level of risk. The report also notes that banks have yet to come into full compliance with regulatory guidance issued last year regarding, among other things, risk management.

Risky practices… regulatory non-compliance… sound familiar?

You can read the story in Reg Blog here.

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