Does the rapid growth in non-bank lending pose a threat to the stability of the financial system? While the current chair of the US Securities and Exchange Commission insists that it does not, there are growing signs that something is rotten in the state of private credit.
LONDON—Aside from the wars that US President Donald Trump has started, there is one major question weighing heavily on the minds of financial-market observers. Are we heading for another meltdown? More specifically, does the rapid growth in private credit pose a threat to the stability of the financial system? The short answer, with apologies to the band Oasis, is “definitely maybe.”