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Crisis exposes flaws in US financial stability regime

Former Fed chair Yellen urges Congress to reform US’s financial stability framework

Bankruptcy
Many US companies could default or file for bankruptcy protection in the coming months

The build-up of record corporate debt and leverage prior to the Covid-19 lockdown means many US companies saddled with additional lockdown-induced debt amid weakened earnings look set either to default or file for bankruptcy protection in the coming months. This expected wave of impaired corporate credit will place a major strain in the US banking and financial system – making a ‘V-shaped’ recovery, predicted by many policy-makers in March, far less likely.

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