PE’s Private Credit Push Can Pose Stability Risk, OCC’s Hsu Says

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.

“Since PE firms are not subject to consolidated supervision, it is not possible for regulators and other outsiders to assess how risky and interdependent these activities are,” Hsu ...