And those failures could be a serious concern , if smart people like Jerome Powell, the chairman of the Federal Reserve Board, are to be believed. In a speech before the Economic Club of New York in November, Mr. Powell said he thought that investors in C.L.O.s would bear the brunt of an uptick in corporate bankruptcies, rather than the big Wall Street banks. Those investors include Japanese banks as well as investors in hedge funds, mutual funds and pension funds (in other words, you and me).

Janet Yellen, Mr. Powell’s predecessor, aired the same concern in December, in a conversation with the Times columnist Paul Krugman. Ms. Yellen said she worried that corporate indebtedness was “quite high”: it’s now more than $9 trillion, up from $4.9 trillion, in 2006, according to the Securities Industry and Financial Markets Association. “I think a lot of the underwriting of that debt is weak,” she said. “I think investors hold it in packages like the subprime packages,” which became so popular before the 2008 crisis. “The same thing has happened. It’s called C.L.O.s, or collateralized loan obligations.”

Randal Quarles, who oversees Wall Street supervision and regulation at the Federal Reserve, also highlighted the looming systemic risk to the financial system, if and when C.L.O.s start getting hit by defaults. On the one hand, he told the Council on Foreign Relations in December, he takes comfort from the fact that Wall Street banks are offloading risky loans to investors — when they do, it moves that risk away from the heart of the financial system. But there might be a “backdoor” risk of exposure for banks, he said. That’s “something we need to be vigilant about,” he added, and it is something the Fed continues to analyze.

One backdoor risk is exacerbated by a tactic of some all-too-clever hedge fund managers. They buy a little of the debt of risky companies at a discount, and then buy a much larger amount of insurance on that debt — so-called “credit default swaps” — to theoretically hedge their risk. These wiseguys then do everything they can to force the company into a bankruptcy filing, which contractually triggers the insurance payoff on the debt. Since the insurance payment exceeds by far the overall cost of the discounted debt, the hedge fund profits handsomely.