Several of Wall Street’s largest private credit managers, including Blackstone, Ares Management, and KKR have received inquiries from the Democratic members of the House Financial Services Committee regarding the operations of their private credit funds, according to a report by Bloomberg.
The reports cites unnamed sources familiar with the matter as highlighting that the questions, which have also been out to Carlyle, Apollo Global Management, Blue Owl Capital, and BlackRock, focus on fund marketing, valuation, fee structures, leverage, incentives, risk management, audits, and the handling of business development companies and other private-credit vehicles. The review comes as lawmakers seek to understand the potential vulnerabilities within the $1.8tn private credit market.
Concerns have grown following instances of funds limiting redemptions due to borrower-related issues, including alleged fraud and the risks posed to software and other sectors by emerging technologies such as artificial intelligence. Committee inquiries reportedly include both general questions and tailored requests specific to each firm’s portfolio and practices.
The probe highlights increasing congressional attention on private credit, even as federal regulators take steps to expand access to alternative assets for retirement plans. Among the issues under scrutiny is the use of payment-in-kind (PIK) loans, which allow borrowers to defer interest payments by increasing debt, a practice that can heighten financial strain for borrowers.
Spokespeople for the firms contacted reportedly declined to comment, and the committee’s Democratic office did not immediately respond to Bloomberg’s requests for comment.
