Old Banks, New Lending Tricks

Lenders haven't sworn off risky financial products. They've come up with a slew of new ones

That didn't take long. The economy hasn't yet recovered from the implosion of risky investments that led to the worst recession in decades -- and already some of the world's biggest banks are peddling a new generation of dicey products to corporations, consumers, and investors.

In recent months such big banks as Bank of America (BAC), Citigroup (C), and JPMorgan Chase (JPM) have rolled out newfangled corporate credit lines tied to complicated and volatile derivatives. Others, including Wells Fargo (WFC) and Fifth Third (FITB), are offering payday-loan programs aimed at cash-strapped consumers. Still others are marketing new, potentially risky "structured notes" to small investors.

There's no indication that the loans and instruments are doomed to fail. If the economy keeps moving toward recovery, as many measures suggest, then the new products might well work out for buyers and sellers alike.

But it's another scenario that worries regulators, lawmakers, and consumer advocates: that banks once again are making dangerous loans to borrowers who can't repay them and selling toxic investments to investors who don't understand the risks -- all of which could cause blowups in the banking sector and weigh on the economy.