The latest headlines pointing to cracks in the private credit market are worrying investors and drawing comparisons to the 2008 financial crisis — yet many also think those fears have been overstated. “I’m in the camp that this is not some systemic risk,” Dan Greenhaus, chief strategist at Solus Alternative Asset Management, told CNBC’s ” Squawk on the Street ” last week. “The equation to 2008, I think, is misplaced, at least in that sense.” Private credit ballooned after the financial crisis to a $1.8 trillion global market in the first half of 2025, according to a Barclays note. That’s up from a roughly $250 billion market during the Great Recession, as more stringent lending standards on traditional banks curbed their lending to mid-sized businesses. But fears spiked at the end of last year after the high-profile collapses of First Brands, an auto parts manufacturer, and Tricolor, a subprime auto lender, called attention to significant fraud and weakness in the sector. The bankruptcies spurred JPMorgan Chase CEO Jamie Dimon to warn there could be more than one ” cockroach ,” as problems in private credit are rarely isolated. More recently, shares of alternative asset managers with the most exposure to enterprise software — which are especially vulnerable to artificial intelligence disruption — have tumbled. And just this month, a number of asset managers including Apollo Global Management , Ares Management and Blue Owl Capital have all scrambled to restrict investor withdrawals. ARES APO,OWL YTD mountain ARES, OWL, APO in 2026 But those pain points could belie some marked differences between now and the great financial crisis that suggest the financial system is better positioned today to handle stress than it was back then. For one, the investor base for private credit is largely made up of institutional investors such as pensions, endowments and sovereign wealth funds that are financially comfortable locking up capital for longer periods of time. That’s opposed to depositors during the financial crisis who — in a loss of confidence — could make a run to their bank to withdraw funds. Private credit is also a very small share of U.S. gross domestic product, according to Barclays. The firm noted that private credit is less than 5% of U.S. GDP, while real estate and equities are both above 100%. What’s more, not all private credit is the same. The vast majority of private credit is in investment-grade placements, and just a small portion focused on higher-yield loans that are below investment grade and come with higher risk. “You don’t have to buy private high yield,” said Christian Chan, investment chief at AssetMark. “It’s a relatively small part of the market, and it’s making all the headlines, but I think in reality, vast majority of private credit managers aren’t really investing there. Some are. But if you just kind of size the market, it’s just not that big.” To be sure, he noted that private credit will see more stress due to normalizing credit conditions. What that means is more challenging financial conditions could expose weaker underwriting standards, especially as the sector comes under more scrutiny. But perhaps the biggest reason investors shouldn’t expect a repeat of 2008 is the lingering memory of the crisis on Wall Street. “A lot of the people who went through the global financial crisis are still around today and are looking at it very closely,” said Thomas Browne, portfolio manager at Keeley Gabelli Funds. “And will manage it very carefully.”
Private credit fears have ripped through Wall Street in 2026. Why they may be overblown
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