Leveraged loans

The Democratic presidential candidate argued in a blog post that the U.S. could avoid a recession by canceling most student debt and authorizing regulators to more aggressively monitor leveraged lending.

Banks may be exposed to a shakeout in the $1.3 trillion leveraged-loan market even though they mostly own the safest portions of debt, according to the Bank for International Settlements.

Federal Reserve Chairman Jerome Powell says the agency is closely monitoring leveraged lending risks, but suggests further regulations on banks aren’t warranted.

The U.S. economy is on solid footing except for one potential trouble spot, according to Bank of America Corp.’s Chief Executive Officer Brian Moynihan: leveraged loans -- a business the bank has dominated for a decade.

Lawmakers waded into a growing debate about the threat posed by corporate credit risk.

Although higher corporate debt could hurt the economy, Federal Reserve Chair Jerome Powell argued changes made since the last crisis will guard against a meltdown.

The ranking Democrat on the Senate Banking Committee says he wants answers from the Financial Stability Oversight Council on efforts to address corporate debt risks.

Amid widespread concern about their exposure to leveraged lending, the debt rating agency says banks have sufficient earnings and capital cushions to continue investing in the sector.

Despite a generally positive picture in the Shared National Credit report, regulators warned that underperforming loans in the portfolio remain elevated.

The amount of debt owed by businesses and the valuations of corporations are elevated, creating a growing source of concern, the Federal Reserve said Wednesday.