Rebel Capitalist News Private Credit Crisis Just Hit JP Morgan!! (Systemic Risks Skyrocket)
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Mar 12, 2026 A deep dive into recent private credit turmoil and JPMorgan’s marking down of software loans. Discussion of how middlemen lenders, back-leverage from banks, and opaque valuations can create a liquidity doom loop. Coverage of redemption pressures, potential fire sales, and why frequency of NAV reporting matters.
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Back Leverage Means Banks Are Exposed To Private Loans
- Private credit funds use back leverage from banks, pledging their underlying loans as collateral for bank financing.
- George Gammon explains banks mark down those pooled loans (software-heavy) and then restrict lending, tightening system liquidity.
500 Score Borrower Illustrates The Middleman Risk
- George Gammon uses a 500-credit-score borrower example to show how private credit intermediaries borrow from banks and relend at higher rates.
- Those relending loans become the exact collateral banks use, so write-downs hit bank balance sheets indirectly.
Redemption Waves Can Force Fire Sales At Deep Discounts
- Redemption pressure is already material for some funds (e.g., Cliffwater reported ~7% redemptions).
- Gammon warns 10–20% redemptions could force fire sales, fetching far below marked NAVs and collapsing funds.