Agencies Issue Updated Leveraged Lending Guidance

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Explore:  FDIC Leveraged Loans OCC

On March 21, the Fed, FDIC and OCC released updated supervisory guidance on leveraged lending which covers transactions characterized by a borrower with a degree of financial leverage that significantly exceeds industry norms. The guidance applies to financial institutions supervised by the agencies that engage in leveraged lending activities and focuses on: (i) establishing a sound risk-management framework; (ii) underwriting standards; (iii) valuation standards; (iv) pipeline management; (v) reporting and analytics; (vi) risk rating leveraged loans; (vii) participants; and (viii) stress testing. Joint Release.