Senator Elizabeth Warren is increasing pressure on the rapidly growing private credit market, warning that it could become the next source of financial instability. On Thursday, she sent strongly worded letters to the three largest credit rating agencies — S&P Global, Moody’s, and Fitch Ratings — and also reached out to Treasury Secretary Scott Bessent.

📩 Warren Warns of Another 2008 Crisis

In her letters, Warren recalled how overly optimistic credit ratings contributed to the 2008 financial collapse. She demanded transparency on how the agencies evaluate private credit products, how they manage conflicts of interest, and whether their methodology differs from how they rate traditional investment products.

She warned that excessively favorable risk assessments could once again lead to crisis — especially when lenders can choose their own rating provider.

🏦 White House Appears to Support the Sector

Ironically, the Trump administration seems to be moving in the opposite direction — supporting efforts to open up private credit opportunities to the public, such as through 401(k) retirement plans.

Warren also wrote a letter to Treasury Secretary Bessent, urging him to assess the potential financial stability risks posed by the size and opacity of the private credit market. She referenced a government report from last year that flagged vulnerabilities like lack of transparency and growing connections to banks and other financial institutions.

📉 JPMorgan: Private Credit Looks Like Pre-Crisis Mortgages

According to JPMorgan Chase CEO Jamie Dimon, today’s private credit market resembles the mortgage sector before the 2008 crash. He warned that not all players maintain sound lending practices, which could lead to problematic financial products.

Despite these concerns, JPMorgan has entered the space, allocating $50 billion from its investment banking unit to support its own private credit platform for acquisitions and other large-scale transactions outside traditional bank channels.

📊 Explosive Growth: From $11.6 Trillion to $30.8 Trillion

SEC Chairman Paul Atkins noted that private funds have grown from $11.6 trillion to $30.8 trillion over the past decade. He said this opens the door for retail investors seeking diversification and risk-adjusted opportunities that align with their time horizons.

🛠️ A New Lending Model: Railcars, Data Centers, and 10-Year Deals

Private credit giants like Apollo, Ares, and KKR are now creating custom lending structures — lending directly from their own funds, secured by unconventional assets such as railcars and data centers.

In return for locking in capital for nearly a decade, borrowers are often willing to pay significantly higher interest rates than they would through traditional banks — avoiding the complex and costly syndication process, credit ratings, and long waiting periods.

These loans are often investment-grade in credit quality, but due to their illiquidity premium, they command higher yields.


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