US banks face rising risks from shadow banking exposure

Exposure to the shadow-banking system has increased significantly among major US banks. According to FDIC data, lending to shadow banks grew at a compound annual growth rate of over 22% between 2010 and 2025. For banks holding more than $250 billion in assets, these loans rose from approximately 6-8% of Tier 1 capital in 2010 to over 76% in 2025.

Recent data indicates a deterioration in credit quality within the private-credit sector. Fitch reported that the US private-credit default rate reached a record 6.3% in August 2026. Specific sectors are experiencing higher distress, with healthcare providers and industrial/manufacturing sectors both seeing default rates of 9.9%.