Federal Reserve Announces 2015 Reserve Requirement and Low Reserve Tranche

On November 13th, the Federal Reserve Board (the “Board”) announced the annual indexing of the reserve requirement exemption amount and the low reserve tranche. The Board also announced changes to the nonexempt deposit cutoff level and the reduced reporting limit. Federal Reserve Board Press Release.

Leveraged Lending

On November 7th, the Federal Deposit Insurance Corporation (“FDIC”), Federal Reserve Board, and Office of the Comptroller of the Currency (“OCC”) published the annual Shared National Credits (“SNC”) review, which found that the volume of criticized assets remained elevated at $340.8 billion, or 10.1 percent of total commitments, which approximately is double pre-crisis levels. Leveraged loans as reported by agent banks totaled $767 billion, or 22.6 percent of the 2014 SNC portfolio and accounted for $254.7 billion, or 74.7 percent, of criticized SNC assets. Material weaknesses in the underwriting and risk management of leveraged loans were observed, and 33.2 percent of leveraged loans were criticized by the agencies. In a supplemental report, the agencies highlighted findings specific to leveraged lending, including serious deficiencies in underwriting standards and risk management of leveraged loans. Joint Agency Press Release. See also OCC Bulletin.