$300 billion in bank capital is flowing into private credit, and the Federal Reserve admits it can’t track where most of it ends up.
Vice Chair for Supervision Michelle Bowman told the House Financial Services Committee Thursday the Fed launched a data-collection effort last month to map bank lending into nonbank financial institutions. Bowman acknowledged “a number of opacities” in how bank money moves through private credit, and said regulators need more data to understand “where the vulnerabilities might lie.”
Moody’s puts U.S. bank exposure at roughly $300 billion, part of more than $1.2 trillion in loans extended to non-depository institutions broadly. The Financial Stability Board’s May report put the global private credit market at $1.5–$2 trillion. Two recent failures made the stakes concrete: bankruptcies at Tricolor, a subprime auto lender, and auto parts maker First Brands burned JPMorgan Chase, Fifth Third, and Jefferies. JPMorgan CEO Jamie Dimon’s October read: “when you see one cockroach, there are probably more.”
Here’s what the data push signals: the Fed’s own researchers have documented rising bank exposure to private credit. Basel III capital rules are designed to pull that lending back inside the regulated perimeter, and disclosure is the first step. Private credit funds relying on bank warehousing lines won’t find the April survey letter to be the last ask.
Wells Fargo carries the highest private credit exposure among the majors, followed by Citi and Bank of America. Among regionals, KeyCorp leads. The Fed hasn’t committed to making the collected data public.
Marcus Webb