Wall Street executives are closely monitoring private credit portfolios as the asset class faces increased scrutiny. Major US lenders have disclosed significant financing exposure to private credit, totaling approximately $108 billion. This focus intensifies amid concerns over AI disruption, fund outflows, and credit stress impacting alternative asset managers.

The $3.5 trillion private credit market, which attracts pension funds, insurers, and wealthy individuals with promises of higher yields, is expanding into less liquid loans, raising questions about its resilience under stress. The direct lending segment, a key part of private credit, competes directly with traditional bank lending for mid-sized and large private equity-backed deals.

Citigroup CFO Gonzalo Luchetti stated the bank is continuously stress-testing its portfolios, including private credit, across various macroeconomic scenarios. Recent negative headlines have highlighted vulnerabilities in software portfolios to AI disruption and potential pressure on loans to middle-market companies.

According to Fitch Ratings, default rates among US corporate borrowers in private credit reached a record 9.2% in 2025. Business development companies (BDCs) are also facing higher borrowing costs and shrinking lending returns.

JPMorgan's CFO Jeremy Barnum noted the bank is "watching the space very closely" and is well-protected through diversification and underwriting. He acknowledged potential system-wide losses in a severe credit cycle with rising defaults. JPMorgan reported $50 billion in private credit exposure in the first quarter.

Citigroup reported $22 billion in private credit exposure to 'tier-1' asset managers, with zero losses historically. Wells Fargo disclosed $36.2 billion in corporate debt finance, primarily private credit, with significant exposure to business services, software, and healthcare sectors.

Despite rapid growth in private credit following the 2008 financial crisis and tighter regulations, industry leaders remain cautiously optimistic. JPMorgan Chase CEO Jamie Dimon stated that risks in private credit are "not systemic." Goldman Sachs CEO David Solomon acknowledged negative media sentiment but emphasized flexibility in patient, selective capital investment. BlackRock CEO Larry Fink described demand for private credit as "structural" due to banks' reduced lending and rising global debt, noting that accelerating institutional demand and wider market spreads favor BlackRock.