Government removes regulations, economy collapses, government bails out the wealthy, quants get ski trips and bonuses while families starve.
US private credit defaults hit record 9.2% in 2025, Fitch says
121–130 of 483 posts
Re: US private credit defaults hit record 9.2% in 2025, Fitch says
#122Unless I'm misunderstanding something, this isn't that big of a number in the larger scale of US banking; According to the numbers in the article that's only about 2.5% of all bank lending (300B/1.2T, with the 1.2T being ~10%)
Re: US private credit defaults hit record 9.2% in 2025, Fitch says
#123To private credit firms . Most of what banks do is private credit, the news is them funding private credit firms.
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Re: US private credit defaults hit record 9.2% in 2025, Fitch says
#124To private credit firms . Most of what banks do is private credit, the news is them funding private credit firms.
I don't know a lot about finance. What is the definition/significance of "firm" in this context (if that's not a complicated question)?
Re: US private credit defaults hit record 9.2% in 2025, Fitch says
#125Trouble has been brewing in private credit for quite a while, but lenders and investors have been reluctant to write anything down, resorting to all kinds of "extend and pretend" games to avoid write-downs.
tick-tock, tick-tock, tick-tock...
Re: US private credit defaults hit record 9.2% in 2025, Fitch says
#126[deleted]
Re: US private credit defaults hit record 9.2% in 2025, Fitch says
#127I've never heard the term private credit so I googled it. > Private credit refers to loans provided to businesses by non-bank institutions—such as private equity firms, hedge funds, and alternative asset managers—rather than traditional banks . Is that correct? So if these companies go under does anyone care? If they go under are they a systemic risk to the economy like the banks in 2008 that got a taxpayer bailout?
I find the money stuff newsletter by Matt Levine (bloomberg) great for this, the link is behind a paywal, but the newsletter is free. strong rec. todays newseltter https://www.bloomberg.com/opinion/newsletters/2026-03-11/pri...
From that newseltter:
> At the Financial Times, Jill Shah and Eric Platt report:
>JPMorgan Chase ... informed private credit lenders that it had marked down the value of certain loans in their portfolios, which serve as the collateral the funds use to borrow from the bank, according to people familiar with the matter. >...
>The loans that have been devalued are to software companies, which are seen as particularly vulnerable to the onset of AI. ...
From what i can tell the problem isn't that an individual who had cash to invest in a private (tech in this case) company goes down
the problem is that a company "private credit firms run retail-focused funds (“business development companies” or BDCs)" which took out a bunch of loans to invest in private tech companies is now having the underlying assets that they got those loans against (long term investments in private tech companies) valued lower.
the link im missing is what happens when people who also invested in BDCs want their money back, where their actual money is locked up in long term investments made to private tech companies, and their ability to get loans is now valued lower. I think this is called a "run" where if someone starts pulling money out, and ultimately you cant, then its a race to get your money out before others do, which applies to both the individuals and the institutional loans.
Note: my quotes are from the bloomberg newsletter i mention, which helped me, not the OP article. And i am writing as much to clarify my own thinking as from a place of understanding. I welcome clarification.
Re: US private credit defaults hit record 9.2% in 2025, Fitch says
#128Luckily debt will be solved by the power of AGI, right? Just one more data centre! One more GPU! It can nearly write a basic three tier application with only 10 critical security vulnerabilities all by itself! Definitely think we’re in for a rough year financial prospects wise, and doesn’t even feel like we recovered from the 2008 crash properly.
We didn't recover from the 2008 crash properly because we didn't introduce consequences for those who created it.
Hundreds of financial institutions with greater or lesser responsibility for the crash in 2008 went under in those years[0]. The shareholders in almost all of these companies lost all of their money and the responsible employees lost their jobs. This includes some of the most guilty companies, like Washington Mutual, Countrywide Financial, IndyMac, Lehman Brothers, Merrill Lynch (through First Franklin Financial), Bear Stearns. But all these companies are completely forgotten now.
Instead everyone hates on Goldman Sachs. Sure, Goldman Sachs deserves hate, but of the big banks they were the _least_ guilty of the crash in 2008. Not saying they were saints, but in 2008 they were the least bad.
0: This list only covers banks, not non-banks like Countrywide Financial: https://en.wikipedia.org/wiki/List_of_bank_failures_in_the_U...
Re: US private credit defaults hit record 9.2% in 2025, Fitch says
#129Reason this number caught my eye: last year the Fed's stress tests found "loss rates from [non-bank financial institution] exposures (i.e., the percentage of loans that are uncollectible) were estimated at 7%, under a severe recession in scenario one" [1]. That's the scenario in which unemployment goes to 10%, home prices crash by 33%, the stock market halves and Treasuries trade at zero percent yield [2]. [1] https:…
What's odd is according to the article, this index estimated an ~8% default rate in 2024. So maybe the stress test was measuring something different? It's weird to think the stress test would find a lower loss rate during a severe recession than in the most recent year with data available.
> maybe the stress test was measuring something different?
The Fed is measuring the loss on bank loans to the private-credit lenders. A 10% portfolio loss shouldn't result in those lenders defaulting to their banks.
By my rough estimate, one can halve the portfolio loss rate to get the NBFI-to-bank loss rate. So a 10% portfolio loss means we're around a 5% expected long-run loss to the banks. Which is still weirdly high, so I feel like I must be missing something...
Re: US private credit defaults hit record 9.2% in 2025, Fitch says
#130Government removes regulations, economy collapses, government bails out the wealthy, quants get ski trips and bonuses while families starve.
And to make matters worse, those who remove regulations then get voted out, but show up on infotainment "opinion" shows disguised as news broadcasts....and whine that those who were voted in to fix the mess aren't fixing the problem fast enough, so those who caused the problem should be voted back in. And lo and behold, they get voted back in, to cause more damage.