The Federal Reserve said stability risks from further private credit redemption requests appear “limited and manageable,” after some of the biggest names in the market blocked investors from getting money out of their funds in recent months.
“Although outflows from these funds have moderately exceeded new inflows in the first quarter of 2026, redemption requests have remained manageable,” the agency said in a financial stability report on Friday.
The Fed noted that continued redemptions and negative sentiment could lead to a reduction in credit availability for some borrowers, especially those with relatively higher credit risk.
Private credit, which surged in the wake of the 2008 financial crisis, has been on examiners’ radar for years. But officials recently stepped up focus when funds came under pressure and investors rushed to withdraw their money.
The Fed asked major US banks for details about their exposure to private credit following the surge in requests, Bloomberg reported in April. Other officials have also have been warning about potential risks, with Financial Stability Board Chair Andrew Bailey saying the space may face more stress due to market shocks from the war in Iran.
At the same time, President Donald Trump’s top regulators are seeking to loosen rules for Wall Street lending giants, partially to help traditional lenders better compete with nonbank firms. Banks have previously argued that heavy regulation was pushing them out of the private credit market.
The Fed’s report also cited survey responses from policymakers, community groups and market participants in a bid to gauge the set of risk events that, should they occur, would be of greatest concern to these groups.
The respondents in recent outreach noted more risks associated with geopolitical tensions, private credit, and artificial intelligence than had done so in the Fed’s most recent survey, while fewer participants cited risks related to policy uncertainty.
“As in previous surveys, a number of respondents continued to note that a successful cyberattack could have particularly severe consequences,” the report said.
Meanwhile Federal Reserve Governor Christopher Waller said the 12 regional Fed banks had agreed to a framework on how to standardise and centralise some functions, such as back-office operations.
The remarks by Waller come less than three weeks after he delivered a speech calling for a shakeup in the US central bank’s operations, arguing that key functions should be centralised and subject to less consensus-building among its regional reserve banks.
In one example, Waller said on Friday that human resources will be centrally led by a single reserve bank, which will operate as a contractor providing the service to the other regional Fed banks.
“Banks will need to give up day-to-day control of many parts of their operations and delegate decision making to a single bank,” Waller said on Friday in remarks prepared for a conference at Stanford University’s Hoover Institution in California. “That requires collective trust in the contractor bank and a commitment by that bank to deliver the services needed by all the other banks.”
While the Fed’s Board of Governors in Washington will maintain an oversight role in the process, Waller said the regional banks would won’t lose their operational independence.
The remarks by Waller come ahead of the expected confirmation of Kevin Warsh next week as the new Fed chair. Warsh has promised sweeping changes at the central bank.
Waller, who heads a committee at the Fed’s Board of Governors that oversees the regional reserve banks, said details still need to be worked out on how the changes will be implemented, but he made clear individual regional banks shouldn’t be able to halt needed reforms.
“While striving for consensus is a great model for making difficult policy decisions, it is not obviously successful when running complex and critical operations,” he said. “Otherwise, one bank can halt actions that are needed to move the system forward.”
He said significant progress had already been made.
“The foundation is now in place for driving an important transformation,” he said.
