May 3 (Reuters) – U.S. Federal Reserve Governor Michael Barr said stress in private credit could spark “psychological \u200ccontagion” leading to a broader credit crunch, \u200cBloomberg News reported on Sunday.<\/p>\n
While direct links between banks and private \u200bcredit do not yet appear “super worrisome,” there were other areas of concern such as the insurance sector’s overlaps with private lenders, Barr said in an interview with \u200cBloomberg News.<\/p>\n
“People might look \u2060at private credit, and instead of saying, ‘This is an idiosyncratic problem, these were high-risk \u2060loans, the rest of the corporate sector is different,’ they might say, ‘Wow, there seem to be cracks in \u200bour corporate \u200bsector. Maybe over here \u200bin the corporate bond \u200cmarket, there are also cracks,'” Barr said.<\/p>\n
Barr also added that “then you could have a credit pullback, and that could lead to more financial strain.”<\/p>\n
Private credit firms have been under stress because of the market’s recent \u200cdownturn with some investors retreating \u200bfrom these investments due to worries \u200babout valuations and \u200blending standards following a handful of high-profile \u200cbankruptcies.<\/p>\n
Fed Chair Jerome Powell said \u200bin March \u200bcentral bank officials are watching developments in the private credit sector for signs of trouble, but \u200bdo not currently \u200csee issues there bringing down the financial system \u200bas a whole.<\/p>\n
(Reporting by Angela Christy in \u200bBengaluru; Editing by Will Dunham)<\/p>\n","protected":false},"excerpt":{"rendered":"May 3 (Reuters) – U.S. Federal Reserve Governor Michael Barr said stress in private credit could spark “psychological…\n","protected":false},"author":3,"featured_media":770823,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[12],"tags":[57039,64,38360,316052,79,258716,16345,316051,67,132,68],"class_list":["post-770822","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-bloomberg-news","tag-business","tag-credit","tag-credit-crunch","tag-economy","tag-michael-barr","tag-private-credit","tag-private-lenders","tag-united-states","tag-unitedstates","tag-us"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116511800478380645","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/770822","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=770822"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/770822\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/770823"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=770822"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=770822"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=770822"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}