Banking Leaders Address Private Credit Concerns
Top executives from JPMorgan Chase, Goldman Sachs, and Citigroup used their quarterly earnings calls to reassure investors about the private credit market’s stability while acknowledging potential risks, according to reports from the financial institutions. The discussions came following the bankruptcy of auto parts supplier First Brands, which had borrowed more than $10 billion.
Jamie Dimon, JPMorgan’s CEO, reportedly warned that investors should expect more companies to follow First Brands’ path if an economic downturn occurs. “My antenna goes up when things like that happen,” the Wall Street veteran stated during the call. “And I probably shouldn’t say this but when you see one cockroach, there are probably more. And so we should — everyone should be forewarned on this one.”
Mixed Signals on Private Credit Standards
JPMorgan’s CFO Jeremy Barnum suggested during the Q3 2025 earnings call that private credit standards remain strong despite recent setbacks. “A lot of the private credit actors are large, very sophisticated, very good at credit underwriting,” Barnum stated. “So I don’t think… that there are necessarily lower standards there or a huge systemic problem.”
However, Dimon expressed more caution, noting that underwriting standards across the industry may not be as robust as believed. “We don’t even know the standards that other banks underwriting to some of these entities,” Dimon reportedly said. “And I would suspect that some of those standards may not be as good as you think.”
Major Banks Report Limited Exposure
JPMorgan disclosed it had written off $170 million in bad debt to car dealership company Tricolor during the quarter but maintained no exposure to First Brands. According to the report, Barnum emphasized that the bank’s lending follows normal practices and is “often highly secured.”
At Goldman Sachs, CEO David Solomon addressed similar concerns during the firm’s earnings call, stating: “We have a very, very diversified book of lending exposure. The vast majority of our lending is collateralized financing and investment-grade rated structures.” Solomon acknowledged that a credit cycle would create “headwinds for all the banks” but expressed confidence in the firm’s risk management processes.
Industry-Wide Risk Assessment
Citigroup CFO Mark Mason reportedly described his bank’s private credit book as “predominantly investment grade” during Citi’s earnings discussion. Mason indicated the bank works with “top-tier asset managers that are sponsors for private credit or established consumer platforms” while maintaining “collateral pools that are well diversified with concentration limits.”
The banking executives’ comments come amid broader market concerns about potential credit deterioration, with analysts suggesting the situation recalls lessons from the Great Recession about the importance of robust underwriting standards. Recent corporate developments including the bankruptcy-to-exit transition of various companies have heightened scrutiny of lending practices across sectors.
Broader Market Context
The private credit warnings emerge alongside other industry challenges, including media industry restructuring and volatility in emerging sectors. Sources indicate that regulatory attention has increased following recent cryptocurrency market developments and ongoing concerns about energy sector financial pressures.
While major banks continue to express confidence in their specific risk management frameworks, Dimon’s cockroach analogy suggests that industry leaders remain vigilant about potential ripple effects from future economic stress, according to analysts monitoring the situation.
