# What are regulators saying about private credit?

Through 2026 the official bodies moved from monitoring to warning to a federal probe, within months.

**International.** The FSB published its "Vulnerabilities in Private Credit" report (May 6), flagging patchy loan-level data, valuation subjectivity and "circles of risk" where banks fund the funds. The IMF warned selective default rates could run **2-3x higher** under stress. The Bank of England's Sarah Breeden ran industry stress tests and warned private credit could tip into a **"market for lemons"** (Akerlof's adverse-selection idea, the same shape as 2008 subprime). The ECB (Financial Stability Review, May 27) named US private credit a **spillover risk** to the euro area.

**US supervisors.** The OCC warned that PIK and restructurings "may mask underlying credit deterioration"; the Fed formally queried major banks on their exposure; and the DOJ (Manhattan US Attorney) opened a probe into valuation marks at a BlackRock private-credit fund. The common thread is opacity - when there is no market price, the mark is the manager's own number.

Full sourced analysis: [https://www.tigzig.com/post/private-credit-market-for-lemons-may2026](https://www.tigzig.com/post/private-credit-market-for-lemons-may2026). Private-credit hub: [https://www.tigzig.com/private-credit](https://www.tigzig.com/private-credit).

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Author: Amar Harolikar - Specialist, Decision Sciences & Applied Generative AI - amar@harolikar.com - https://www.linkedin.com/in/amarharolikar
Source: https://www.tigzig.com/agents-faq/what-are-regulators-saying-about-private-credit
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