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Further, the joint guidance of the Fed, Treasury Department and FDIC on leveraged lending (which flags 6x total leverage as "rais[ing] concerns"), combined with concerns about capital requirements (already making themselves felt in the revolving loan market), is casting a shadow on the new year.
Chase also suffered from an industry-wide downturn in high-yield bond underwriting and leveraged lending.
The current slump in leveraged lending is analogous to the slowdown a decade ago, he said.
Financial companies dialed back their leveraged lending, according to industry data.
The recent reluctance to crack down on leveraged lending is part of a broader regulatory walkback.
The leveraged lending guidance was the focus of a Washington Post front-page article on Sunday.
Banks were dipping their toes back into a risky type of corporate credit called leveraged lending.
Judging by fourth-quarter results posted by Goldman Sachs and Lehman Brothers, the leveraged lending market is recovering.
The executive, Thomas Bunn, was the longtime head of leveraged lending, or financings for companies with ratings below investment grade.
But in 2005, Lehman committed its own capital to buying commercial real estate, leveraged lending, and private equity-like investments.
However, the Fed has warned banks that high levels of leveraged lending may adversely impact the Fed's consideration of the annual stress tests.
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