Market Extra: U.S. lawmakers want better oversight of risky corporate loans

As U.S. lawmakers are joining the call for better oversight of the booming leveraged loan industry, some experts warn they better hurry before the next downturn.

Last week a subcommittee of the U.S. House Financial Services Committee held a high-profile hearing on leveraged loans to study the explosion of debt owed by weaker U.S. companies in the past decade, and to see if it could pose systemic risks.

A leveraged loan is a loan extended to companies that already have considerable amounts of debt or a poor credit history. HYG, -0.03%

Several witnesses at the hearing drew parallels between today’s leverage loan market and the proliferation of subprime mortgages in the run-up to the financial crisis, according to written testimony.

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