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OCC Sees Resurgent Credit Risks in Banking Sector

Compliance Week | July 1, 2014

The banking industry is lowering its standards for underwriting loans and letting more credit risk seep back into the financial system, according to a new report from a top federal regulator.

The Office of the Comptroller of the Currency published its semi-annual risk perspective Wednesday, an overview of national banking activity and the amount of risk floating around the financial system. The OCC said credit risk is now rising, after several years of banks trying to reduce risk and clean up bad loans they made prior to the financial crisis in 2008.

“Examiners have observed erosion in the underwriting standards” for a variety of loans, the report said. “Recent examinations of commercial loan portfolios have identified an increase in policy and underwriting exceptions, including some examples of risk...

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