Private Credit Is Bad, But Not 2008 Bad; Exodus Spreads to Consumer Loans
First, the biggest writedowns so far have been associated with outright fraud
Second, private credit funds are more resilient to panic than the funding vehicles of the 2008 crisis.
One of the key vulnerabilities in 2008 was the use of short-term borrowing to finance long-term illiquid investments. This caused fears of losses to become self-fulfilling: Investors pulled funding, forcing liquidations that drove down asset prices far below intrinsic value.
Private funds, by contrast, typically have the contractual right to limit quarterly withdrawals to a small proportion (e.g., 5%) of assets. This mitigates such pernicious fire-sale dynamics.
Third, the economic context isn’t as bad. Granted, if the war in Iran caused oil prices to reach $200 per barrel and stay there for some time, it could generate economic stress comparable to the nationwide decline in US housing prices that triggered the 2008 crisis.
But we’re not there yet.
All that said, private credit can still get ugly.
Now that investors are aware of withdrawal limits, they’ll have a greater incentive to always ask for the maximum, requiring further asset sales that will depress returns — which, in turn, will encourage more withdrawals.
Worse, funds will likely sell their best assets first to minimize realized losses, leaving behind the most problematic holdings — and giving investors yet more incentive to get out sooner.
Judging from the recent spate of redemption requests, this adverse feedback loop has already begun.
Bill Dudley Bloomberg March 18, 2026
https://www.bloomberg.com/opinion/articles/2026-03-18/private-credit-is-bad-but-not-2008-bad
The Bank Run of 2023 Could Easily Happen Again - Bill Dudley
Regulators have yet to address the system’s vulnerability to sudden depositor withdrawals.
https://englundmacro.blogspot.com/2024/04/the-bank-run-of-2023-could-easily.html
Private Credit’s Investor Exodus Spreads to Consumer Loans
Stone Ridge Asset Management told clients in the fund last week that recent redemption requests were so high that it would honor only 11% of the amount investors wanted back.
That suggests that investors’ concerns about private credit are broadening.
Unlike other private-credit funds that experienced a flight of investors in recent weeks, Stone Ridge’s fund didn’t hold loans to software makers or other corporate sectors that investors fear will be displaced by advances in artificial intelligence.
Wall Street Journal March 18, 2026
Banking stands revealed as a part of the state masquerading as part of the private sector.
This is the famous “Chicago Plan”.
Martin Wolf FT 21 March 2023
https://englundmacro.blogspot.com/2023/03/banking-stands-revealed-as-part-of.html
It may not be 2007 all over again, but...
Massive leveraged buyouts and an ever-growing pile of risky debt are causing concerns
https://englundmacro.blogspot.com/2025/09/it-may-not-be-2007-all-over-again-but.html
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