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Fed's Tarullo warns on credit risk 

February 27, 2014
Dow Jones, The Australian

The Federal Reserve's leading bank supervisor, Daniel Tarullo, said Tuesday that he is seeing modestly increased risks in credit markets, particularly in corporate bonds and leveraged loans.

Mr Tarullo said the United States central bank shouldn't rule out using monetary policy to fight potentially damaging asset bubbles, but stressed it should first try to employ and refine current existing regulatory tools for spotting such threats to financial stability.

"High-yield corporate bond and leveraged loan funds, for instance, have seen strong inflows, reflecting greater investor appetite for risky corporate credit, while underwriting standards have deteriorated, raising the possibility of large losses going forward," Mr Tarullo told a conference sponsored by the National Association for Business Economics.

Read more: The Australian

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