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<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div><\/div>\n<\/div>\nUS Federal Reserve Governor Michael Barr has warned that stress in the fast-growing private credit market could trigger \u201cpsychological contagion\u201d and spill into the broader financial system, Reuters reported citing an interview with Bloomberg News.Barr said direct links between banks and private credit firms do not currently appear \u201csuper worrisome\u201d, but other areas such as insurance sector exposure to private lenders remain a concern.\u201cPeople might look at private credit, and instead of saying, \u2018This is an idiosyncratic problem, these were high-risk loans, the rest of the corporate sector is different,\u2019 they might say, \u2018Wow, there seem to be cracks in our corporate sector. Maybe over here in the corporate bond market, there are also cracks,” Barr said.He added that \u201cthen you could have a credit pullback, and that could lead to more financial strain.\u201dPrivate credit firms have come under pressure during the recent market downturn, with some investors stepping back amid concerns over valuations and lending standards following several high-profile bankruptcies.The comments come as regulators increasingly monitor the rapid expansion of private lending markets, which have grown as an alternative source of financing outside traditional banking channels.Federal Reserve Chair Jerome Powell had said in March that policymakers were watching developments in the private credit sector for signs of stress, but did not currently see risks large enough to threaten the wider financial system.<\/div>\n<\/div>\n