WASHINGTON – In a move that reeks of deregulation and invites disaster, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) have jointly gutted oversight of the leveraged lending market. The agencies announced December 5, 2025, they are rescinding the “Interagency Guidance on Leveraged Lending” (dated March 21, 2013) and its accompanying FAQs (November 7, 2014). This effectively throws open the floodgates for high-risk loans, potentially repeating the mistakes that led to the 2008 financial meltdown.
The official statement, a bland recitation of bureaucratic jargon, claims the previous guidance was “overly restrictive” and “impeded banks’ application to leveraged lending of the risk management principles.” Don’t buy it. What it *really* did was keep a lid on the kind of reckless lending that fuels corporate greed and leaves taxpayers on the hook when things go south. The agencies admit this rollback caused a shift – banks retreated from the market, and non-bank lenders swooped in, operating with even *less* oversight.
Leveraged lending, for the uninitiated, involves financing companies already drowning in debt – businesses with low credit ratings, or those undergoing risky mergers and acquisitions. It’s the financial equivalent of throwing a life raft to someone already underwater. While the agencies claim it “provides access to capital” and “fuels the nation’s economy,” it’s more accurately described as enabling unsustainable growth and incentivizing dangerous levels of debt. The previous guidance attempted to mitigate those risks, but now, it’s gone.
The move isn’t just reckless, it’s potentially illegal. The U.S. Government Accountability Office discovered the 2013 Guidance should have been submitted to Congress for review under the Congressional Review Act, but it wasn’t. Essentially, the agencies bypassed a crucial check on their power. Now, they’re claiming the rescission simply returns banks to “general principles for safe and sound lending,” which is a laughable excuse for dismantling specific, targeted regulations.
The new “principles” outlined in the announcement – managing credit and liquidity risks, defining a reasonable risk appetite, aligning activities with that appetite – are vague and unenforceable. They’re the same tired platitudes banks have been spouting for decades while lining their pockets with profits from increasingly risky ventures. This isn’t about responsible lending; it’s about maximizing short-term gains at the expense of long-term stability. Expect a surge in highly leveraged loans, and brace for the inevitable fallout when the bubble bursts.
Grimy Times will continue to investigate the forces behind this dangerous deregulation and its potential impact on the U.S. economy. This isn’t just a policy change; it’s a betrayal of public trust and a clear signal that the lessons of the past have been conveniently forgotten. The agencies insist banks will “tailor” risk management, but history suggests that self-regulation is a fantasy when billions of dollars are at stake. # # #
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