WASHINGTON, March 29 - The U.S. Treasury Department is expected to hold, within weeks, the initial session in a planned series of consultations with both domestic and international insurance regulators focused on recent volatility in private credit markets, according to two sources familiar with the plans.
Investor confidence in the roughly $2 trillion non-bank lending sector has been unsettled in recent weeks amid worries over liquidity, transparency and lending discipline. Treasury Secretary Scott Bessent has been preparing since January to initiate a sustained program of engagement with insurance regulators beginning in the second quarter of this year, the sources said. The first meeting could be announced as soon as Wednesday.
Participants will use the opening meeting to decide how future engagements will be structured, with an emphasis on fact-based and transparent oversight of private credit lenders as their interactions with regulated financial institutions increase.
Although the Treasury has no direct regulatory authority over the insurance industry, Bessent plans to position the department as a "convening authority, resource and forum" for the 50 state insurance regulators. Treasury officials want to hear regulators' perspectives on several specific topics, including the rising use of fund-level leverage, the consistency of private credit ratings, the use of offshore reinsurance and the liquidity characteristics of investments in private credit markets, the sources said. Any policy recommendations would follow only after a sequence of consultations.
A U.S. Treasury spokesperson did not immediately respond to a request for comment.
During remarks at the Economic Club of Dallas in February, Bessent - a former hedge fund manager - described the Treasury's role when assets flow from private credit lenders into firms that are subject to regulation. "When assets move from private credit lenders into regulated financial institutions, such as pension funds, banks or captive insurance companies, 'Treasury gets involved,'" he said. "I am concerned with watching, how does this get to the regulated financial system."
Bessent acknowledged the role private credit lending has played in filling financing gaps: he said private credit helped bridge shortfalls when regulators tightened bank controls after the 2008-2009 financial crisis and again when bank lending froze during the COVID-19 pandemic. Yet he emphasized the need to assess whether private credit lenders have been prudent in underwriting and portfolio construction, saying, "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? And we want to prevent contagion."
On the subject of individual investors' access to private credit, Bessent said retirement-account holders should be able to take advantage of private credit assets, but warned that the Treasury would be part of the process regulating how private assets move into individual investor accounts. He added that the Trump administration would not permit working Americans' savings and investment accounts to become "a dumping ground" for "rotten" assets.
The planned consultations are intended to gather granular feedback from state and international insurance regulators about the evolving relationship between private credit funds and regulated balance sheets. The Treasury's stated objective is to create an ongoing and transparent dialogue before deciding if and what policy actions might be appropriate.
Summary: The Treasury is preparing to convene insurance regulators domestically and internationally to review strains in private credit markets, focusing on leverage, ratings consistency, offshore reinsurance and liquidity as links between private lenders and regulated institutions grow. Secretary Scott Bessent has framed the department as a convening forum and said any policy steps would follow a series of consultations.