Wall St. Revives Dangerous Debt

Fool us once, shame on you; fool us twice? The Financial Times reports that Wall Street is bringing back some of its most controversial debt practices—the same ones that caused the financial crisis. Covenant-light loans, for example, give credit with few or no conditions. Now there are fears that government efforts to spur lending have caused a “best-of-all-possible-worlds” mentality on Wall Street. “We have had a huge rally in debt,” said Dino Kos, a former New York Federal Reserve Bank official. “Everything needs to be just right for that rally to be validated.”