Private Credit’s Angry Investors; we have seen this movie many times
What Banks Stand to Lose From the Private-Credit Mess
There has been a surge in recent years of bank lending to nonbanks, or so-called non-depository financial institutions, or NDFIs. Besides private lenders, this also includes loans to mortgage lenders, consumer lenders and private-equity funds.
Bank lending to nonbank financial institutions has grown to about $1.9 trillion from about $1.1 trillion three years ago.
This now represents about 14% of all bank loans, according to Federal Reserve data.
https://www.wsj.com/finance/banking/what-banks-stand-to-lose-from-the-private-credit-mess-194a5338
The past few weeks has seen one firm after another frustrate requests from individual investors to get their money back.
These clients are worried about recent fund losses and other potential problems such as heavy lending to AI-threatened software companies.
But firms are mostly sticking to the letter of quarterly redemption limits in the face of much larger demands.
The problem is that private credit funds usually lend money directly to private equity-owned companies for five years
Limiting payouts is the right move to halt the viral contagion of falling loan prices and further panicky withdrawals,
but retail investors are not happy and the exit queues could be even longer next quarter.
We have seen this movie many times with complex, illiquid or structured investment products sold to individuals
Paul J. Davies Bloomberg March 27, 2026
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