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Economic Commentary

Bank Lending to LBOs: Risks and Supervisory Response

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Leveraged buyouts (LBOs), a popular method of corporate restructuring in the past decade, have attracted significant attention among the news media, Congress, and bank regulators. The huge size of recent takeover deals and the dramatic increase in LBO credits on bank portfolios have raised concerns about the risks of LBO financing. This article examines these risks and discusses the current response of bank supervisory authorities to the increased use of funding by leveraged buyouts.

02.15.1989EC 2/15/1989

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit clevelandfed.org for updates.

Suggested Citation

Thomson, James B. 1989. “Bank Lending to LBOs: Risks and Supervisory Response.” Federal Reserve Bank of Cleveland, Economic Commentary 2/15/1989.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International