Republicans' Big Night; Leveraged Loan Worries

Receiving Wide Coverage ...

'Watch Out': The results of Tuesday's elections are scrutinized as an attempt is made to extrapolate what it all means to business, with one likely outcome being an improved policy climate for banks. (For a look at how the Senate Banking Committee is likely to proceed under probable chairman Richard Shelby, read American Banker's coverage.) Sen. Mitch McConnell of Kentucky is in the spotlight, as he'll have a long list of items to manage, testing his clout. One test for McConnell will be walking the tightrope on the Export-Import Bank. Does McConnell stick up for the bank's supposedly business-friendly policies? Or does McConnell agree with some groups that the bank is nothing but corporate cronyism run amok? Janet Yellen and the Federal Reserve are also expected to be subjected to an intense spotlight by the new GOP leadership on Capitol Hill. Camden Fine, leader of the Independent Community Bankers of America, sums up nicely advice for Yellen: "Watch out." The Fed can expect to be questioned on its policies on keeping interest rates low, among many of the central bank's other policies. The Journal also reminds readers that Shelby is no fan of the Fed and he's likely to talk tough against Fed policies in his new position on the Senate Banking Committee.

Wall Street Journal

Santander isn't as strong as it looks, writes "Heard on the Street" columnist Paul Davies. The stress tests that Santander boasted about passing actually were lenient on the Spanish bank. Looking ahead to the stricter capital rules that will go into effect in 2019, investors aren't so pleased with Santander.

Japan's central bank governor Haruhiko Kuroda said he'll do whatever it takes to fight deflation, with a goal of reaching 2% inflation.

Financial Times

ING repaid six months early the bailout it received from the Dutch government. ING paid off the debt early in part so it can start paying a dividend early next year. ING's early repayment shows that it recovered faster than other European banks that struggled during the last crisis, including Royal Bank of Scotland and Bankia in Spain.

New York Times

Regulators are worried about weakened credit underwriting standards, especially in the market of making leveraged loans to companies with weak balance sheets. The Federal Reserve and the Office of the Comptroller of the Currency intend to block loans they see as too risky. Bankers are perplexed, however, as leveraged loans are secured by actual assets, giving lenders the ability to recover more in the event of a default.