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Subject: Credit Policy
Date: March 30, 2012
To: Chief Executive Officers of All National Banks and Federal Savings Associations, Federal Branches and Agencies, Department and Division Heads, and All Examining Personnel
Description: Request for Comment on Revised Leveraged Lending Guidance
The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (the agencies) are seeking comment on proposed revisions to the interagency leveraged finance guidance issued in April 2001 (2001 guidance). This notice and request for comment was published in the Federal Register on March 30, 2012 (attached).
Since issuance of the 2001 guidance, the agencies have observed tremendous growth in the volume of leveraged credit and in the participation of non-regulated investors. The pipeline of aggressively structured commitments has grown rapidly, management information systems (MIS) have at times proven less than satisfactory, and many institutions have found themselves holding large pipelines of higher-risk commitments at a time when buyer demand has diminished significantly.
In light of the market’s evolution, the agencies propose replacing the 2001 guidance with revised leveraged finance guidance that refocuses attention to five key areas:
Comment is requested on the burden of implementing certain aspects of the proposed guidance, and comments will be accepted through June 8, 2012. Any questions regarding this proposed guidance should be directed to Lou Ann Francis, National Bank Examiner and Technical Expert, Credit Risk Policy Division, at (202) 874-5170.