Fed Banks to Scrutinize $1.3 Trillion Private Credit Market

Regulators have long struggled to gauge the systemic risks posed by private credit, largely due to the industry’s lack of mandatory disclosure. By segmenting the market into three tiers based on EBITDA—ranging from lower middle market firms under $30 million to upper middle market entities exceeding $100 million—the Fed intends to map the flow of capital and evaluate the impact on monetary policy.

This oversight effort arrives as investor anxiety mounts. Capital outflows from business development companies have accelerated this year, fueled by fears of AI-driven disruption in software lending and shrinking returns. The results of the pilot, which will examine credit availability and evolving risk appetites, are scheduled for publication in the first quarter of 2027.