NY Fed Reviews Major Banks' $1.5 Trillion Private Credit Exposure

Key Facts

1The NY Fed is reviewing major banks' lending to private credit firms, which now exceeds $1.5 trillion.

2The review included JPMorgan, Wells Fargo, Barclays, and Morgan Stanley, focusing on collateral quality and risk management.

3The review was prompted by JPMorgan's markdowns on software loans deemed vulnerable to AI disruption.

The Federal Reserve Bank of New York is reviewing major banks' lending to private credit firms, which now exceeds $1.5 trillion. According to a report from Semafor, the review included JPMorgan, Wells Fargo, Barclays, and Morgan Stanley, focusing on collateral quality and risk management practices. The scrutiny was prompted by JPMorgan's decision to mark down the value of software loans deemed vulnerable to disruption from artificial intelligence.

JPM closed at $332.62 on October 5, 2026, while WFC closed at $80.45, MS at $190.31, and BCS at $23.71 on October 2, 2026. This regulatory review comes as bank lending to nonbank financial institutions has grown to represent approximately 11% of all bank loans. Regulators are concerned that rapid growth in this shadow banking sector could lead to tighter lending standards and impact capital requirements for major Wall Street institutions.