Fed officials raised concerns publicly as early as 2011. 8 The Fed, the OCC, and the FDIC issued supervisory guidance emphasizing these concerns in 2013. 9 In 2014, the agencies clarified the guidance through published FAQs and began to exercise intensive supervision at the largest regulated banks emphasizing the need to improve underwriting standards and credit risk management on safety and soundness grounds.
10 The case of the leveraged loan market is an interesting one, because it sits at the intersection between core financial institutions and credit markets and illustrates the challenges supervisors face in thinking about intervention in credit markets. I will turn to that market now in some detail.