Abstract
Through financial ingenuity, lending practices often generate an indirect yet significant impact on the average person’s finances. Relatedly, the 2007–2008 Financial Crisis revealed the profound and far-reaching consequences attributable to risky lending. Congress sought to curb lenders’ risk appetite by passing the Dodd-Frank Act, legislation which commissioned new, industry-specific oversight bodies. However, this legislative antidote had a side effect: it engendered a new class of borrowers—those precluded, based on a variety of risk diagnostics, from obtaining capital from the most popular lenders. But when the conventional borrowing doors closed, private lending markets opened in earnest. Since the Covid-19 pandemic, growth in private credit markets has been insatiable; this protracted phase is commonly dubbed “the Golden Age of Private Credit.” The problem is that private credit investors are, at this juncture, overwhelmingly comprised of pension and insurance funds: the same individual who disproportionately suffered in the wake of the Financial Crisis now faces a familiar threat in new form. Therefore, policymakers face a dilemma. On the one hand, private credit markets create tangible procompetitive benefits that are worthy of preservation. On the other hand, the law would usually deem the loans underlying these investment vehicles too risky to permit consumer engagement. This Note harmonizes policy with market realities, demonstrating that regulation can both facilitate growth in private credit markets while simultaneously augmenting consumer protection. In particular, these guidelines delineate the features of private credit that should be left uninhibited and identifies the gaps where policymakers can implement non-disruptive protective measures in the consumer’s interest.
Recommended Citation
Sam Friedman,
Blueprints for the Gilded Age of Borrowing: Theorizing Mutually Beneficial Policies for the Golden Age of Private Credit,
90 Brook. L. Rev.
1309
(2025).
Available at:
https://brooklynworks.brooklaw.edu/blr/vol90/iss4/7
