For risks undertaken by credit institutions with alternative asset managers with the conclusion dangerous transactions and circumvent existing rules warned an American authority that are involved in the supervision of banks. The warning was made by the Authority, as there are concerns about a possible crash in non classified loans to businesses. The bank already has asked banks to avoid the administration of some of the most dangerous non classified loans to companies, but is concerned that banks can continue to make these transactions, sharing some risks with their money managers.
We see no benefit to the banks, if they cooperate with the fund managers to circumvent the rules and continue to flood the market with weak agreements, told Reuters the First Deputy Supervisor to monitor large banks Martin Pfinsgkraf. Supervisors see a series of risks to the financial system, they are able to prevent the repetition of the housing crash that caused the financial crisis of 2008-2009. They do not feel comfortable with the risk allocation in more entities, where the overall level of risk in the system becomes dangerously high.
This may be the case with the leveraged loan issuance, which reached the amount, a record 1.14 trillion dollars in 2013, which is increased by 72% from 2012, according to Reuters. The average level of debt of companies that get these loans reached in 2013 corresponds to 6.21 times earnings EBITDA from 5.86 times in 2012 and is the highest of in 2007. The comments show how OCC feel encouraged supervisors now, as they seek to reduce the threats to the financial system. Under the reform law Dodd Frank 2010, the OCC, the Federal Reserve Bank and the Federal Deposit Insurance Company including supervisors belonging to the Oversight Board of the Financial Stability Board, which is responsible for identifying and stopping potential sources of credit crash.
By Nicole P.