AIC Response to New GAO Report Findings that Private Credit is Important to America’s Economy
WASHINGTON, D.C. – Today, American Investment Council President and CEO Drew Maloney released the following statement regarding the Government Accountability’s Office new report that finds that private credit is playing an important role across the country and not a systemic risk to America’s economy.
“Based on our initial review, this new GAO report proves once again that the private credit market is playing an important role in fueling America’s economy. Throughout the COVID-19 crisis, we have seen how companies of all sizes across the country have relied on private credit to keep their doors open and their workers employed. Our industry will continue to work with regulators as we invest in every state across America and help rebuild America’s economic recovery.”
Key Highlights from the GAO Report “Financial Stability: Agencies Have Not Found Leveraged Lending to Significantly Threaten Stability but Remain Cautious Amid Pandemic.”
- Based on regulators’ assessments, leveraged lending activities had not contributed significantly to the distress of any large financial entity whose failure could threaten financial stability. Large banks’ strong capital positions have allowed them to manage their leveraged lending exposures, and the exposure of insurers and other investors also appeared manageable.
- Present-day CLO securities appear to pose less of a risk to financial stability than did similar securities during the 2007–2009 financial crisis, according to regulators and market participants. For example, CLO securities have better investor protections, are more insulated from market swings, and are not widely tied to other risky, complex instruments.
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