The private-credit boom
After the 2008 financial crisis, regulators believed that corporate debt was starting to show similar risks that were apparent in subprime mortgages before they imploded.
Even though losses from sub-investment grade corporate loans were relatively low, regulators were concerned about banks’ underwriting standards since they often didn’t hold the loans on their balance sheets and would sell them to loan and bond funds, collecting massive fees in the process.
The so-called leveraged lending guidance was put in place in 2013 by the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Federal Reserve as part of a crackdown on banks’ ability to make riskier loans.
That opened a window for big private investment funds that weren’t regulated, which stepped into the gap and started making the loans themselves.
The private credit industry has now become a giant on Wall Street and a competitor to the banks, all outside of regulators’ purview.
Capital raised for lending to private-equity-backed companies jumped more than 100-fold to nearly $700 billion between 2006 and 2024.
As the years rolled on, big banks like JPMorgan Chase and Bank of America have lost out on significant revenue while new competitors like Apollo Global Management and Ares Management have expanded.
WSJ Dec. 5, 2025
https://www.wsj.com/finance/banking/regulators-relax-rules-on-high-risk-lending-for-banks-9eec9ffa
Some U.S. Insurers parking more than half the fixed-income assets they need to fund policies and annuities in hard-to-trade debt, according to new research by Moody’s Ratings.
Illiquid investments accounted for $685 billion—about 18%—of the $3.8 trillion in fixed-income investments insurers held at the end of 2024.
Two of the most exposed companies are Security Benefit Life Insurance, which is owned by Todd Boehly’s investment firm Eldridge, and Delaware Life Insurance, a subsidiary of private-equity-owned Nassau Financial Group, according to the research.
Private credit, which includes corporate loans, real-estate debt and complex asset-backed securities, has surged as fund managers like Apollo Global Management and KKR replaced banks as the top lenders in some markets.
The National Association of Insurance Commissioners, a standard-setting group for insurers, has been evaluating private assets for years.
The organization recently restructured its task force on the issue, “signaling heightened scrutiny of private and complex assets,” Moody’s said.
WSJ 12 November 2025
Shadow banking bubble risks global shock, warns credit rating agency Fitch.
The private credit market $1.5 trillion
https://englundmacro.blogspot.com/2025/10/shadow-banking-bubble-risks-global.html
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