The Boston Federal Reserve has raised concerns about the systemic risks posed by banks' increasing exposure to the private credit sector, which is valued at approximately $1.6 trillion. Banks are expanding their lending to support loans originated by private credit firms and business development companies (BDCs), thereby assuming indirect risks they would typically avoid. This trend has been noted amid a broader expansion of nonbank lending. Concurrently, Canada's major banks have bolstered their loan loss reserves, with four of the six largest institutions setting aside over C$1 billion in the second quarter to mitigate potential defaults amid trade uncertainties. The growth in private credit lending has also attracted regulatory attention, with tensions noted between the Securities and Exchange Commission and the Federal Reserve regarding oversight. Additionally, private credit lenders face challenges from an oversupply of capital, which is suppressing pricing and deal activity. In the U.S., banks' increasing financial support to shadow banking entities appears driven more by the need to prevent collapses than by profit motives, as these shadow banks have become integral to the financial system, compelling banks to act as lenders of last resort. This dynamic highlights emerging vulnerabilities within the financial system as regulatory frameworks struggle to manage the expanding shadow banking sector.