US regulators: Still heavy risk in big bank loans

Staff Writer
Columbus CEO

WASHINGTON (AP) — Federal regulators say they're still seeing a heavy dose of risk in large loans made by banks and other financial institutions, despite the recovering U.S. economy.

The Federal Reserve and other agencies cite ongoing loose lending standards and an increase in loans made for financing takeovers of companies. Those loans are risky because they can greatly exceed the amount of a firm's earnings.

The steep decline in oil prices over the past year has hurt many energy companies. Loans in the industry are at greater risk of souring or are already in default, according to the agencies' 2014 annual review.

The review found that banks are making progress in improving their credit standards. But there are "continuing gaps" between industry practices and standards of bank safety, it said.