US Treasury to consult with insurance regulators on private credit lenders, sources say
* US Treasury plans meetings with insurance regulators, explores details on leverage and liquidity
* The consultations come at a time when private lenders are strained by asset quality and liquidity concerns
* Bessent says private credit helps US economy but wants to avoid financial contagion
WASHINGTON, March 29 (Reuters) – The U.S. Treasury Department is expected to convene the first of a series of meetings with domestic and international insurance regulators in the coming weeks on the latest developments in strained private credit markets, two sources familiar with the plans told Reuters.
Concerns about liquidity, transparency and lending discipline have rattled investor sentiment in the $2 trillion non-bank lending sector in recent weeks.
Treasury Secretary Scott Bessent has been planning regular and ongoing consultations with insurance regulators since January in the second quarter of this year, sources said.
Sources said the first of the meetings could be announced on Wednesday.
Based on the results of this meeting, participants will determine the direction of future efforts aimed at improving regulators’ fact-based, transparent oversight of private lenders as their interactions with regulated financial institutions increase.
Treasury does not have direct regulatory authority over the insurance industry, but Bessent will seek to make the department a “convening authority, resource and forum” for all 50 U.S. state insurance regulators.
Treasury officials are keen to hear regulators’ feedback on the increased use of fund-level leverage, the consistency of private credit ratings, the use of offshore reinsurance and the liquidity of investments in private credit markets, the sources said, adding that any policy prescription could only come after a series of consultations.
A U.S. Treasury spokesman did not immediately respond to a request for comment.
Bessent, a former hedge fund manager, told the Economic Club of Dallas in February that “Treasury Intervention kicks in” when assets move from private lenders to regulated financial institutions such as pension funds, banks or insurance companies.
“I’m interested in watching how this reaches the regulated financial system,” Bessent said.
He added that private lenders helped bridge the gap in financing when regulators tightened controls on banks after the 2008-2009 financial crisis and again froze bank lending during the COVID-19 pandemic, but he wanted to ensure private lenders were “prudent in their loan portfolios.”
“We want to measure whether this will have any impact on the overall economy. It’s contributed a lot so far, but how does it still impact the regulated system? And we want to prevent contagion.”
Bessent said individual investors through retirement or 401(k) retirement accounts should be able to tap into private loan assets, but he cautioned that the Treasury Department is part of the process of regulating how private assets are transferred into individual investor accounts.
He said the Trump administration will not allow working Americans’ savings and investment accounts to become a “dumping ground” for “rotten” assets. (Reporting by David Lawder; Editing by Edmund Klamann)
