Moulton Expresses Concerns About Financial Markets Stability, Urges Appropriations Committee To Examine Private Credit Risk to Protect Everyday Americans

WASHINGTON, D.C. - Congressmen Seth Moulton (MA-06) and Stephen Lynch (MA-08) called on the House Appropriations Subcommittee on Financial Services to urge the Treasury Department to require federal regulators to conduct a stress test of private credit markets.

In a letter to Subcommittee Chairman Dave Joyce (OH-14) and Ranking Member Steny Hoyer (MD-05), Congressmen Moulton and Lynch pressed for the inclusion of report language in the FY2027 Financial Services appropriations bill that directs the Financial Stability Oversight Council (FSOC) to assess how vulnerable these markets are to financial shocks, and what that vulnerability could mean for the rest of the economy.

The more-than $3 trillion private credit lending market has expanded dramatically in recent years, and private credit risks are increasingly extending deeper into our economy. For example, private credit loans now account for 35 percent of the investment portfolios of North American insurance companies.

This request came amidst upheaval in these private credit markets-which are opaque and largely exist outside of the regulatory framework designed after 2008 to keep bank lending safe.

"Innovative, flexible capital markets are critical to our nation's dynamism, but they must be accompanied by adequate regulation and risk management,"the lawmakers wrote. "As private credit markets expand rapidly-including into the portfolios of individual investors-Congress has a duty to ensure they are structurally sound."

The full letter can be read here.

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