European financial regulators are running into a wall when it comes to getting data from U.S. officials about the private credit market — and the friction is exposing a growing divide between the two sides of the Atlantic on financial oversight, according to officials familiar with the situation.
European authorities have grown increasingly worried about the global private credit industry, which is estimated at approximately $2 trillion and largely concentrated in the United States. Their concerns center on limited transparency, unclear asset valuations, and complicated funding arrangements within the sector.
Those concerns have been amplified by recent stress in the markets, including restrictions placed on withdrawals at certain funds and a string of notable corporate defaults — all of which have raised alarms about unseen risks quietly spreading through the broader financial system.
European supervisors have been pushing for detailed information on the assets that the financial institutions they regulate are exposed to, including specifics on borrowers, how investments are valued, and what guarantees back those investments.
However, U.S. Treasury officials have resisted sharing that data more broadly. Multiple sources say Treasury officials have argued the information is confidential and that requiring additional disclosures would place unnecessary burdens on companies.
Bundesbank board member Michael Theurer described the pushback in an interview, saying: “We feel some resistance from some supervisors around the world. There are arguments that they are not allowed to share — they have legal restrictions. And then there is the general criticism that these are new reporting requirements, a new bureaucratic burden.”
The conversations between U.S. and European supervisors have been taking place within international bodies, including the Financial Stability Board, according to other officials who asked not to be identified because FSB discussions are kept confidential.
A spokesperson for the FSB noted that inconsistent data and varying definitions make it difficult to compare private credit risks from one country to another, pointing to the need for better disclosure and shared reporting standards.
Some European officials have cautioned that if more information is not made available, regulators may have no choice but to impose tougher capital requirements on the banks they supervise in order to account for potential losses.
Spokespeople for both the Federal Reserve and the U.S. Treasury Department declined to comment. A spokesperson for the U.S. Securities and Exchange Commission — which represents the United States at the FSB alongside the Fed and Treasury — said the agency participates in those forums but takes seriously the confidentiality and legal limits around sharing certain information.
The data dispute is part of a broader transatlantic rift that extends across issues including international security, climate change, trade, market regulation, and technology.
At the heart of European regulators’ concerns is what they describe as an inability to truly see through private credit investment structures to understand where risks ultimately end up.
Recent analysis from the European Central Bank suggests that direct exposure among euro zone banks is relatively contained — estimated at around €62.5 billion, or approximately $71.46 billion, which equals just 0.2% of total assets. Insurers hold roughly €211 billion in exposure, while pension funds hold around €52 billion. Those exposures are concentrated among a small number of large institutions, particularly in Germany, France, and the Netherlands.
Still, officials say that looking at the big picture is no longer sufficient. They are especially worried about the risk of contagion spreading from the United States and want granular information on the underlying assets, borrowers, valuations, and guarantees tied to private credit investments.
Regulators say it is becoming harder to track financial risk as private credit assets get repackaged and moved through multiple layers of the financial system, creating complex links between banks, insurance companies, and pension funds.
Theurer of the Bundesbank put it plainly: “There are cascades of different investment layers — collateralised loan obligations, leveraged lending, asset-intensive reinsurances — and it is possible to combine all of them. That makes the underlying risks opaque.”
The ECB recently ran a simulation of a severe shock to global private credit markets and concluded that direct losses would be manageable for banks and investors. However, the exercise also revealed that the most significant damage would likely come not from the private credit loans themselves, but from broader market selloffs and valuation losses rippling through the financial system — a finding that has deepened supervisors’ concerns that aggregate exposure figures may be understating the true level of risk.
One European policymaker summed up the frustration this way: “Where is the money? Where is the risk? What kind of assets are underneath and how are they valued?”
In the United States, Fed Vice Chair for Supervision Michelle Bowman said in May that default and loss rates among non-bank lenders would need to be “abnormally high” before banks would be put at serious risk, adding that bank loans to private credit firms appeared to be well secured. She also noted that the Fed is working to make its reporting requirements more detailed when it comes to bank lending to non-banks, in order to better gauge concentration risks.
