Federal Reserve officials have questioned several big U.S. banks about their exposure to China’s Evergrande Group, joining other global regulators in examining the potential fallout from the property developer’s debt crisis, Bloomberg News reported. Troubles at Evergrande, with more than $300 billion of liabilities, has reportedly spurred the Fed to seek information to head off any risks to financial stability. Hong Kong’s central bank also asked lenders there to report risks tied to Evergrande, China’s largest issuer of high-yield, dollar-denominated bonds. U.S. banking supervisors routinely question lenders about their ties to struggling companies. Fed Chair Jerome Powell said last week that “there’s not a direct United States exposure,” adding that big Chinese banks also are “not tremendously exposed.” The contagion danger had been similarly dismissed by European Central Bank President Christine Lagarde, who said direct exposure in Europe is “limited.” Powell said his main worry is “that it would affect global financial conditions through confidence channels and that kind of thing.”
