JPMorgan Declines to Share Private Credit Lending Data With Regulators
JPMorgan Chase has reportedly declined to share its private credit lending data with regulators.
As the Financial Times (FT) reported Saturday (Feb. 15), this decision hinders efforts by the likes of the Federal Deposit Insurance Corp. (FDIC) to gauge the depth of connections between banks, buyout firms and the fast-growing private lending sector.
According to the report, regulators had given banks until Feb. 4 to share their year-end exposure to different types of “non-bank financial institutions” on a “best-efforts basis,” with most of America’s big banks complying.
However, the FT said, JPMorgan Chase — the largest lender in the country — listed all of the $133 billion it had lent to non-banks as “other” in a report filed with the FDIC, rather than breaking these loans down by types of borrowers.
The $133 billion figure, the report noted, is greater than the total loans of all but a handful of the country’s biggest banks.
A source familiar with JPMorgan’s decision told the FT that the bank believed it faced an “operational risk” by reporting its loan categories one way to the FDIC and another to the Federal Reserve, which has kept its past reporting requirements and guidelines for disclosing loans to non-banks.
As covered here last year, the private credit market is a nearly $2 trillion business, with several banking giants partnering with companies in that space.
“Non-banks have become some of the most important and potentially risky borrowers of the large U.S. banks,” Viral Acharya of New York University’s Stern School of Business told the FT. “Right now the only one who has a picture of how much of a risk this is, it’s the Fed, and only of the banks that it stress tests.”
The rise of non-bank financial institutions (NBFIs) — also known as shadow banks or non-depository financial institutions (NDFIs) — has drawn scrutiny from regulators like the Fed, FDIC and Office of the Comptroller of the Currency.
“The risks have been highlighted in recent months, and the risks transcend borders,” PYMNTS wrote late last year.
During the summer of 2024, Financial Stability Board Chair Klaas Knot warned that recent “incidents of market stress and liquidity strains” have been tied to NBFIs.
However, the regulatory landscape in the U.S. has been changing under a new presidential administration, one which is reportedly considering folding the FDIC into other agencies or limiting its power.
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