Regulatory Scrutiny Intensifies: FSOC, Warren, and SEC Actions on Private Credit

Regulatory scrutiny of private credit markets intensified sharply in Q2 2026, spanning the Financial Stability Oversight Council (FSOC), Congressional letters, and SEC rulemaking.

FSOC Focus

• U.S. authorities discussed private credit industry woes at an FSOC meeting in April 2026, The Wall Street Journal reported.
• The FSOC proposed new guidance on nonbank designations on May 14, 2026, aimed at strengthening its ability to address systemic risk from nonbank financial intermediaries — though critics argued the guidance actually undermines its authority.
• The FSB's May 2026 report explicitly flagged AI concentration risk in private credit and warned that a sharp correction in AI asset valuations could produce sizeable credit losses.

Warren Letter to Bessent and Atkins (May 15, 2026)

Senator Elizabeth Warren wrote to Treasury Secretary Scott Bessent (FSOC chair) and SEC Chair Paul Atkins, stating their agencies are "exacerbating the risks of a private-credit-induced financial crisis." Warren had previously pushed Bessent to develop a stress test for nonbanks engaged in private credit.

SEC Activity

• On May 19, 2026, the SEC proposed transformative reforms to help public companies conduct registered offerings and simplify reporting requirements.
• On May 5, 2026, the SEC proposed amendments allowing all public companies to voluntarily adopt semiannual reporting.

Industry Response: Apollo Daily Valuations

Apollo Global Management announced May 6 it plans to offer daily valuations for its private-credit funds by the end of September 2026 — a direct response to concerns about valuation opacity and transparency. This is a significant concession from one of the largest private credit managers and may set a competitive standard that other managers will be pressured to follow.