Private Credit Risks to Be Assessed by US Government Watchdog

The US Government Accountability Office (GAO) is investigating the potential risks associated with the rapidly growing private credit industry, which has reached a value of $1.7 trillion. This move suggests that the US government is increasing its scrutiny of the impact of this sector on the overall economy. Private credit, which refers to loans made by non-bank lenders, has become an increasingly popular alternative to traditional bank financing, particularly for companies that may have difficulty accessing traditional sources of credit. However, the GAO's assessment indicates that policymakers are concerned about the potential systemic risks posed by this industry. The GAO's review will likely examine the size and concentration of the private credit market, the types of borrowers and lenders involved, and the potential for the industry to amplify financial instability during economic downturns. The findings of this assessment could inform future regulatory and policy decisions related to the private credit industry.