The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC) have withdrawn their 2013 leveraged lending guidance, which they deemed overly restrictive for banks. This guidance had previously limited banks' ability to use standard risk management practices when making leveraged loans, contributing to a decline in the leveraged lending market share held by regulated banks while allowing nonbank lenders to gain a stronger foothold. The agencies now encourage banks to establish their own definitions of leveraged loans and apply general risk management principles to these decisions. Analysts expect this regulatory change to spur growth in commercial and industrial loans, with some banks potentially experiencing a sharp increase in lending activity. The previous guidance mistakenly encompassed loans to investment-grade companies and aimed to restrict riskier loans to firms with high debt levels. By rescinding it, banks are given more independence over their lending practices, though they are still expected to manage risks effectively and maintain sound lending standards. Key recommendations for banks include thorough assessment of a borrower’s repayment sources, consistent application of underwriting criteria, and ongoing monitoring of leveraged loans throughout their life cycles. While this shift may allow banks more flexibility, it also raises concerns about potential credit losses in the next economic downturn. Some analysts predict that while banks will initially ramp up lending, this could lead to higher credit losses down the line.