Some major U.S. banks are privately complaining that they are getting the short end of the regulatory stick when it comes to the profitable business of lending to heavily indebted companies. Banking and regulatory sources with direct knowledge of the situation said the U.S. Federal Reserve and the Office of the Comptroller of the Currency (OCC) appear to be taking different approaches to implementing a set of guidelines on leveraged loans, even though they issued them jointly in March last year.The OCC, a division of the U.S. Treasury Department, is zealously implementing them, while the Fed is more relaxed about it, the sources said. While all major Wall Street banks are regulated by the Fed, the OCC oversees only those with national bank charters, which allow a bank to build a nationwide branch network.The OCC, for example, is more frequently contacting banks about the issue and querying them extensively over their compliance in loans they make to heavily indebted companies. OCC-regulated banks have also received more verbal warnings as well as official letters demanding fixes than banks that are regulated just by the Fed in the United States, the sources said. Such letters and warnings are the first steps before fines and penalties.The difference in approach, which even some regulatory sources privately admit exists, has meant that banks such as Credit Suisse Group AG and Goldman Sachs Group Inc are able to be more aggressive in making leveraged loans just because they are regulated by the Fed, not the OCC, the sources said.
Credit Suisse Group AG is a Switzerland-based holding company engaged in private banking, investment banking and asset management areas. Shares of CS fell by 0.29% or $-0.09/share to $31.34. In the past year, the shares have traded as low as $25.93 and as high as $33.98. On average, 871673 shares of CS exchange hands on a given day and today's volume is recorded at 609843.
The Goldman Sachs Group, Inc. (Goldman Sachs), is a global investment banking, securities and investment management firm that provides a range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Shares of GS traded higher by 0.25% or $0.4/share to $160.85. In the past year, the shares have traded as low as $140.39 and as high as $181.13. On average, 3625290 shares of GS exchange hands on a given day and today's volume is recorded at 2934201.
Source
