Story perspectives

Federal Reserve Reviews Bank Risks in $1.8T Private Credit Sector

4/11/2026

Summary

Story summary

The Federal Reserve is examining major U.S. banks' exposure to private credit to gauge risks as the sector reaches $1.8 trillion.
Jerome Powell, the chair of the Federal Reserve, says the sector is stressed but does not foresee immediate systemic risks.
The U.S. Treasury Department is questioning the insurance industry about ties to private credit.
Intertwined ties between banks and private credit funds could amplify losses during downturns.

History

Historical Context

The Glass-Steagall Act, enacted in 1933, established a crucial separation between commercial banks and investment firms to address the financial instability that led to over 9,000 bank failures during the Great Depression. This legislation was gradually undermined, culminating in its repeal by the Gramm-Leach-Bliley Act in 1999. Today, the Federal Reserve is examining major banks' $1.8 trillion exposure to private credit, reflecting ongoing concerns about financial risks.

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Story summary

The Federal Reserve is examining major U.S. banks' exposure to private credit to gauge risks as the sector reaches $1.8 trillion.
Jerome Powell, the chair of the Federal Reserve, says the sector is stressed but does not foresee immediate systemic risks.
The U.S. Treasury Department is questioning the insurance industry about ties to private credit.
Intertwined ties between banks and private credit funds could amplify losses during downturns.

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