By Damian Paletta Damian Paletta Reporter covering economic policy Email Bio Follow April 6 at 6:21 PM Actions by federal regulators and Republicans in Congress over the past two years have paved the way for banks and other financial companies to issue more than $1 trillion in risky corporate loans, sparking fears that Washington and Wall Street are repeating the mistakes made before the financial crisis.
“This means that the next downturn that we have could be more serious and longer-lasting and more difficult to deal with than it would have been if we had constrained these practices,” former Federal Reserve chair Janet L. Yellen said in an interview. This article is based on interviews with 31 current and former bank regulators, senior administration officials, congressional aides, bankers and market analysts. Some of them spoke on the condition of anonymity to discuss internal government deliberations.This tension between easy money and unknown risks has flummoxed some of the very officials who have allowed the lending binge to heat up since 2017.
But these loans are high-risk. They’re made to borrowers who have access to less cash than others, and who tend to fall behind on payments with greater frequency when interest rates go up or the economy slows down.Long retired later in 2011. Two years later, the OCC joined with the Federal Reserve and Federal Deposit Insurance Corp., the main banking regulators, to issue formal “guidance” meant to steer banks away from the riskiest of these loans, cementing Long’s warning into a firmer policy.
A Credit Suisse spokeswoman, Karina Byrne, said the company does not “comment on any of our specific interactions with our regulators.” The biggest opposition to the guidelines was made by a trade association called the Clearing House Association, whose members include JP Morgan Chase, Wells Fargo and Bank of America, those people said. The Clearing House Association last year merged with another entity and formed a group called the Bank Policy Institute. That group’s chief executive, Greg Baer, declined to comment.In March 2017, two months after Trump’s inauguration, Sen. Patrick J.
“It comes, first of all, in the context of a broader effort on my part to diminish the . . . near omnipotence of some regulators and restore legislative authority to where it belongs, which is Congress,” Toomey said. In October 2017, the GAO issued a report saying the 2013 “guidance” should have been issued in a more formal way, a position that raised the possibility of invalidating the regulators’ power.
When Donnie’s done nothing but deregulate, EVERYONE should be scared!
Did you know in the USA lawyers are self-regulated...?
And of course, you would have us believe the Democrats have been pure and virtuous in all things banking & financial, check out the history of Freddie Mac & Fannie Mae, check out the Glass-Steagall Act of 1933 placed a 'wall of separation' between banks and brokerages,
Republicans did the same thing before crashing in the economy in 2007-2008. They allowed their buddies in the banking industry to do as they pleased, plunging the US into a recession and then leaving the mess for Obama to clean up. Why do they hate the US so much?
Of course! Short term memory.
SenToomey wow protecting the needs of your constituents once again. You do love money
Corporations own our politicians and they've captured regulatory agencies, that's how.
RepKatiePorter SenWarren Keep an eye on this development.
Of course Toomey....fighting for the little guy....NOT!!!
2008 all over again
Fake News...,
Representative The Max will document all transactions with Deutsche Bank and The Trump Empire. She is on it like white on rice. I say with respect. Kate Smith warming up to deliver that special song She introduced in 1934. Yes Indeed 'God Bless American '
good to know the banks still own congress
LMAO!! 8yrs under Hussein the economy failed. America is progressing without Progressives in just 2 yrs.
Aw, look SenToomey you made the cover photo! “Sen. Patrick J. Toomey (R-Pa.) is one of the Senate’s top voices calling for more banking deregulation. Ten of his 17 biggest campaign contributors are financial company officials.“ TuesdaysToomey
RIGHT FROM THE LIBERAL LEFT PARTY OF THE WP FAVOR. Can a democrat say DODD-FRANK. Sure a loan you bet got any $ no well that's OK everyone can have a loan it's only FAIR. RIGHT
nice another opinion piece
We desperately need tougher regulations so that jobs will continue to leave our country for less regulated countries.
Loans Loans Latest News, Loans Loans Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: CNBC - 🏆 12. / 72 Read more »