US Treasury to consult with insurance regulators on private credit lenders

The U.S. Treasury Department is preparing to hold its first formal meetings with domestic and international insurance regulators to scrutinize the $2 trillion private-credit sector, amid growing worries about leverage, liquidity, and potential spillover into the regulated financial system.

Treasury Secretary Scott Bessent, who has been planning these consultations since January, wants detailed information on fund-level leverage, rating consistency, offshore reinsurance practices, and overall liquidity. The talks, which could be announced as soon as this week, aim to strengthen oversight as private-credit assets increasingly flow into pension funds, banks, and captive insurers.

Bessent has publicly praised private credit for filling lending gaps left by tighter bank regulation after 2008 and the COVID-19 freeze, but he is determined to prevent “contagion” to the broader economy. “We want to gauge, could it have any effects on the overall economy? Thus far, it’s been very additive, but again, how does it affect the regulated system?” he said in February. The Treasury has no direct authority over insurers but intends to act as a convening forum for the 50 state regulators. Any policy changes would follow a series of discussions rather than immediate action.