The Solari Report | Catherine Austin Fitts@solari_the
Mr Global Does Not Mind Defaulting Because That Is How It Is All Picked Up for a Dime on the Dollar
"Update on the Trouble in Private Credit with Tiffany Cianci" @TheVinoMom
In January, I welcomed private equity expert Tiffany Cianci to the Solari Report. Although our discussion focused on private equity, we also touched on private credit (lending that happens by private non-bank lenders, also called private debt) as an area equally prone to financial legerdemain. As I noted in that discussion, private equity deals are leveraged with debt, and this can give rise to private credit “funny business” when private equity leverages its own deals.
Tiffany predicted that the private credit bubble would soon pop, and she was right. With private credit defaults now rising and investors pulling billions of dollars from large private credit funds, some funds are responding by restricting withdrawals. This week, Tiffany returns to update us on these first-quarter developments, discussing their implications for the big banks that loan to private credit providers.
As Moody’s pointed out last fall, “the rise of private credit has altered the competitive landscape for US banks, which … ceded significant lending turf following the 2007-08 financial crisis.” Somewhat paradoxically, however, banks also helped fuel the growth of private credit by shifting their lending focus to “non depository financial institutions”—including roughly $300 billion as of last June to private credit providers. As of mid-2025, banks had also lent $285 billion to private equity funds and had another $340 billion in “unutilized bank lending commitments.”As these “bank linkages” have increased, said Vanguard last month, “From a systemic perspective, the primary consideration is less the likelihood of widespread private-credit defaults and more the interaction between private credit liquidity needs and bank balance sheets” [emphasis added].
Moody’s politely suggests that banks’ “indirect lending” to the private credit market comes with “inherently lower transparency” and requires “vigilant credit risk management.” Echoing that thought, media reports are emerging to suggest that with the current troubles, some private credit firms are “embellishing their financial health” and taking steps to mask their debt. A letter by hedge fund Rubric Capital warned its backers that “distribution cuts are so worrisome that some bad actors are playing Enron-like accounting games.”
Unfortunately, this is a crisis that is likely to hit pension funds. Tiffany’s sharp analysis can help you understand the potential reverberations for pensions, banks, insurance companies, and what they mean to you.
Full Report: solari.com/update-on-the-…
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