[BUG] Claude Code not automatically loading .claude/settings.json during startup despite documentation indicating this should happen

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

• Problem: Claude Code not automatically loading .claude/settings.json during startup despite documentation

indicating this should happen

• Evidence: Assistant had to use Read tool to discover project hooks instead of having them available from

initialization

• Documentation Reference: https://docs.claude.com/en/docs/claude-code/settings shows automatic hierarchical

settings loading

• Impact: Assistant lacks awareness of project-specific hooks and operational constraints during startup

What Should Happen?

Claude should automatically load .claude/settings.json during startup and be aware of project-specific hooks/settings without needing to use file access tools to discover them.

Error Messages/Logs

Steps to Reproduce

Steps to Reproduce:

1. Create a new Claude Code session in a project directory containing .claude/settings.json
2. Observe that Claude does not automatically report or acknowledge project-specific settings during

initialization

1. Ask Claude "What hooks do we have?"
2. Observe that Claude searches git hooks, pre-commit configs, and global settings but misses the project-specific

.claude/settings.json

1. Point Claude to the .claude/settings.json file
2. Observe that Claude must use the Read tool to discover the settings, proving they weren't loaded during startup

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

Claude Code Version: 1.0.120

Platform

AWS Bedrock

Operating System

Windows

Terminal/Shell

WSL (Windows Subsystem for Linux)

Additional Information

_No response_