PANews, May 3 news, according to Jin10 reports, Federal Reserve Governor Barr stated that pressures in the private credit sector could trigger "psychological contagion," leading to a broader credit tightening. He again warned that, given the rising risks, regulatory oversight of Wall Street should not be relaxed. Barr mentioned that while the direct links between banks and private credit do not appear to be "particularly concerning" at the moment, overlaps in other areas such as the insurance industry and private lending institutions are worth attention. "There is also a psychological contagion issue," he said, "when people see private credit, they may not say 'this is a special issue, these are high-risk loans, the other parts of the corporate sector are different,' but instead say, 'Wow, our corporate sector seems to be showing cracks. Perhaps there are also cracks in the corporate bond market over here.'" He added, "Then there could be credit contraction, which might lead to greater financial stress."

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