Leveraged lending offers credit to commercial businesses with high levels of debt, helps companies obtain funding for leveraged buyouts, mergers and acquisitions, and recapitalizing businesses. While many commercial businesses see success from these loans and are able to repay them, the high levels of debt and lower liquidity can reduce a business’ ability to respond to unexpected changes in economic conditions.
The Community Reinvestment Act (CRA) isn’t a new concept to the banking world by any means. We have probably all heard of the CRA, but do we know enough about it and how it can affect our community banks?
In early September, the FDIC sent out a financial institution letter requesting comments from Chief Executive Officers and Chief Financial Officers of community banks on interest rate restrictions applicable to institutions that are under capitalized. This letter applies to community banks with total assets less than 1 billion dollars and are FDIC insured.