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The Fed: Fed’s Quarles says leveraged loan buildup isn’t a replay of subprime crisis

Bloomberg News/Landov
Federal Reserve Vice Chair for Supervision Randal Quarles is also chairman of the Financial Stability Board.

The central bank’s point person on financial stability said he wasn’t so worried about the rise of leveraged loans, which are risky loans to already debt-laden companies.

In a talk at Yale University on Tuesday, Fed Vice Chair for Supervision Randal Quarles added the media has been overplaying and oversimplifying the story in such a way to make it seem it was analogous to “the Earth must be getting hit by an asteroid.”

In particular, Quarles said leveraged loans risk “is not really a direct analog to the subprime [mortgage] lending” that caused the financial crisis.

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