Stress in private credit could spark 'psychological contagion,' Fed's Barr tells Bloomberg News
Key takeaways
- Stress in private credit could spark 'psychological contagion,' Fed's Barr tells Bloomberg News Reuters Sun, May 3, 2026 at 9:56 PM GMT+7 1 min read May 3 (Reuters) - U.S.
- Maybe over here in the corporate bond market, there are also cracks, " Barr said.
- Barr also added that "then you could have a credit pullback, and that could lead to more financial strain."
Stress in private credit could spark 'psychological contagion,' Fed's Barr tells Bloomberg News Reuters Sun, May 3, 2026 at 9:56 PM GMT+7 1 min read May 3 (Reuters) - U.S. Federal Reserve Governor Michael Barr said stress in private credit could spark "psychological contagion" leading to a broader credit crunch, Bloomberg News reported on Sunday.
While direct links between banks and private credit do not yet appear "super worrisome," there were other areas of concern such as the insurance sector s overlaps with private lenders, Barr said in an interview with Bloomberg News.
"People might look at private credit, and instead of saying, This is an idiosyncratic problem, these were high-risk loans, the rest of the corporate sector is different, they might say, Wow, there seem to be cracks in our corporate sector. Maybe over here in the corporate bond market, there are also cracks, " Barr said.