US banks reveal $1.14T exposure to risky private credit, raising systemic risk concerns.

In early 2026, the six largest US banks disclosed for the first time their massive exposure to non-depository financial institutions (NDFIs), including private credit funds, totaling over $1.14 trillion in loans. This sector, often called shadow banking, is rapidly growing and less regulated, raising concerns about hidden risks. While some banks like Wells Fargo and JPMorgan emphasize strong credit quality and diversification, others like Goldman Sachs aggressively expand their private credit platforms. Experts warn that rising defaults and complex debt structures in middle-market private credit could trigger broader financial stress if the credit cycle worsens, highlighting the intertwined risks between traditional banks and shadow banks.