Report: Fed Seeks Details from Banks on Private Credit Exposure

Federal Reserve examiners are asking large U.S. banks for detailed information on their private credit exposures amid a surge in redemptions from private credit funds and rising non-performing loans in the industry, according to people familiar with the matter. The questions from Fed examiners aim to assess the extent of stress in the private credit industry and its potential to transmit to the broader financial system. Among a range of questions incorporated into their regular supervisory processes, the Fed is particularly focused on loans that private credit funds obtain from banks. Such actions can amplify returns and make private credit funds more attractive during favorable market conditions, but may expose banks to the risk of losses in an adverse environment. The U.S. Treasury is also making inquiries about the insurance industry's exposure to private credit. (Bloomberg)