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The Comptroller of the Currency is preparing...

The Comptroller of the Currency is preparing guidelines requiring nationally chartered banks to consider more carefully their involvement in leveraged buyouts. Within the next several weeks, the agency will be sending new guidelines to its examiners and to banks to help them evaluate when an institution is vulnerable because of highly leveraged lending. Critics of leveraged buyouts say most of the deals have been put together since 1982, when the economy began expanding, and have not been tested by a recession. The new guidelines will not impose limits on LBO lending, but will direct examiners to determine if a bank’s policies include limits on LBO lending as a whole and limits for single deals. Banks have lent $70 billion to highly leveraged transactions since mid-1987, according to a research firm.


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