Washington is stepping up scrutiny of the booming private credit market, with the US Treasury set to convene domestic and international insurance regulators for talks on risks in the sector starting this month.
The sessions, first reported by Reuters, will run through early May and examine emerging risks, lending practices and liquidity conditions.
Reuters valued the non-bank lending sector at $2 trillion, though that figure mainly covers direct corporate lending. Industry body AIMA, in research published last month, placed the broader global private credit market at $3.5 trillion.
Treasury Secretary Scott Bessent has already laid down a marker. Speaking to the Economic Club of Dallas in February, the former hedge fund manager warned that retirement accounts must not become "a dumping ground" for "rotten" assets as private credit products enter regulated channels like pension funds.
Officials want feedback on fund-level leverage, the reliability of private credit ratings, offshore reinsurance and liquidity, Reuters reported.
The stakes are particularly high for the insurance industry. Moody's estimates up to a third of the $6 trillion in invested assets held by US life insurers sat in private credit at the end of 2024, with some 80% of insurers it surveyed planning to grow those holdings further.
The reviews come as defaults rattle the sector. The bankruptcies of auto-parts supplier First Brands and car dealership Tricolor, where private credit lenders held exposure, have shaken investor confidence.
Some major US banks have tightened lending, while certain private funds have capped withdrawals as redemption requests surged.
Bank of England Governor Andrew Bailey warned on Wednesday against treating such failures as isolated, saying the sector's opacity could amplify shocks. St. Louis Federal Reserve President Alberto Musalem was more sanguine, calling stress in private credit markets largely contained.
The Treasury's push adds a federal dimension to state-level efforts already under way. In early March, the National Association of Insurance Commissioners adopted new reporting requirements for private investments and restructured its oversight apparatus into four specialized groups, S&P Global Market Intelligence reported.
NAIC President Scott White has flagged transparency in life insurance portfolios as a top regulatory priority for 2026.
"This first series of meetings will lay the groundwork for sustained close collaboration" with state insurance regulators, the Treasury said.
