PE’s Private Credit Push Can Pose Stability Risk, Bank Regulator Says
- Acting comptroller raises concern over firms acting like banks
- Hsu says potential “blurring” also exists with payment firms
PE firms and other so-called nonbanks don’t face the same level of federal oversight as traditional lenders.
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The private equity industry’s rapid advance into private credit poses potential threats to financial stability, according to a top US bank regulator.
Michael Hsu, the acting comptroller of the currency, said on Wednesday that officials need to keep tabs on risks from PE firms originating more loans and ramping up other activities typically done by banks. He also raised concerns about buyout firms’ increased activity in insurance and creative funding structures.