Bank regulators said Thursday they are concerned by a significant rise in leverage lending volumes and continued loose underwriting, as well as the deteriorating credit of oil and gas companies. The comments, from a joint release of the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, came in a review of the $3.9 trillion of credits shared by multiple financial institutions. Oil and gas borrowers accounted for 15% of so-called classified commitments, which are assets that are rated substandard, doubtful or loss. Nonbank entities held 67% of all classified credits, U.S. banks held 17.8% and foreign banks held 15.2%.
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