Wednesday, December 2, 2009
Fed suddenly concerned about the impact of low rates on market practices?
Some of the most controversial financing practices of the credit-bubble years â€“ from cov lite loans to Pik toggle notes and dividend recap exercises â€“ have returned to Wall Street, stoking fears that debt markets are growing overheated. â€œWe have had a huge rally in debt,â€ said Dino Kos, a former New York Federal Reserve Bank official. In the minutes of its November meeting, the Federal Open Market Committee noted â€œthe possibility that some negative side effects might result from the maintenance of very low short-term interest rates including the possibility of excessive risk-takingâ€.