Cook Downplays Private Credit Risks, Cautions Against Complacency

Federal Reserve Governor Lisa Cook downplayed systemic risks posed by private credit, stating that there is currently no indication of significant risk. However, she emphasized the importance of continued monitoring of this growing market.

Cook pointed out that the central bank has obtained more data on private credit in recent years, providing a clearer picture of how it affects the broader financial system. The Fed's semiannual financial stability report noted that artificial intelligence and private credit were each cited as significant risks by 50% of respondents in a Federal Reserve Bank of New York survey.

Banks' involvement in the private credit market has grown substantially over the past decade, with bank lending commitments to business development companies increasing from around $10 billion in 2013 to more than $50 billion in 2025. Proposed changes to bank capital rules could further deepen banks' ties to private credit.