Private Credit and Large Banks
- 2 hours ago
- 5 min read
April 16, 2026 | As we noted in our discussion with Julie Hyman on Yahoo Finance this week, the big question facing banks in Q1 2026 is disclosure about private credit. The big losers in private credit are not banks, but rather institutional and retail investors who were lured into these wholly unsuitable, structurally illiquid investments by the false statements made by the sponsors.
As Goldman Sachs (GS) President John Waldron said this week: Private credit vehicles lack "clarity that this is really not a liquid product."
The banks, so far, are safe so long as the equity standing in front of them in loans to nondepository financial institutions (NDFIs) remain money good. Some of these exposures are in collateralized loan obligations (CLOs), which typically feature 30-40% equity in front of the investment grade tranches. Some banks have enhanced their disclosure of private credit exposures, others have not. Below we review bank earnings so far and give some thoughts on what to expect in Q2, both in private credit and other areas.
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