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We are flabbergasted that investors are not questioning the banks’ involvement in private credit. It is as if banks are protecting private credit, and the mainstream media is not asking the questions.
Wait. The WSJ did run a series, including “Big Banks Are Playing Both Sides of the Private-Credit Meltdown.” Worth reading. But it does not address how banks fund private credit through their NBFI allocations, nor does it put a dollar figure on their actual exposure.
That is a huge gap, and it is not addressed.
The OFR put bank and non-bank lending to U.S. private credit at $410 to $540 billion as of year-end 2024, with another $300 billion of uncalled LP commitments behind it. Q1 2026 bank disclosures put JPMorgan at $50 billion, Wells Fargo at $36 billion, Citigroup at $22 billion, and Barclays at $89 billion of structured financing to non-banks.
Each one is in a different category. None of them aggregate cleanly to the regulatory total. The numbers are out there. No one knows where. The questions are not being asked.
So which is it?
Is the investing community willfully downplaying the risks of bank involvement in private credit? Or is this the setup for the bailout ask, because if private credit fails, the banks fail with it?
Banks are embedded in private credit through multiple channels.
Direct lending is one of them, alongside warehouse financing, subscription lines, SPV routing, and fund administration. Each runs with different collateral, different loss triggers, and different disclosure.
The Q1 2026 bank disclosures cut across several of these categories, and no single disclosed number captures the full picture. The OFR puts total bank and nonbank lending to U.S. private credit at $410 to $540 billion as of year-end 2024, with another $300 billion of uncalled limited partner commitments (OFR Brief 26-02, March 12, 2026).
Moody’s January 2026 outlook projects that global AUM will exceed $2 trillion in 2026 and approach $4 trillion by 2030. The Q1 2026 bank disclosures look smaller against those numbers.
JPMorgan $50 billion. Wells Fargo $36 billion. Citigroup $22 billion. Each is a carve-out of a much larger NBFI book that Whalen, in Basel terms, puts at roughly $4 trillion, including undrawn commitments.
The headline private credit number and the actual bank exposure are not the same thing. The numbers only matter if the losses show up somewhere. But no one knows where.
Red Lobster is the cleanest public test case. The chain went bankrupt in May 2024. Fortress was the largest secured creditor. Instead of selling the company, the lenders took it over through a debt-for-equity restructuring approved in September 2024, with Fortress, TCW Private Credit, and Blue Torch as co-investors in the new entity. Five quarters later, TCW marked its Red Lobster equity stake down by approximately 98%.
Ninety-eight percent!!
What was carried at $31 million is now $761,628. No bank took the loss. TCW’s investors did.
First Brands was the same principle. Jefferies’ Point Bonita fund held $715 million of First Brands receivables. Advisers disclosed that $2.3 billion of receivables had vanished. The U.S. Attorney for the Southern District of New York indicted founder Patrick James and his brother Edward James on January 29, 2026, on charges of wire fraud, bank fraud, and money laundering conspiracy.
The ~$2.3 billion is not yet recovered. Is that number even real?
It is important to note that the “investment grade” label several banks applied to their private credit books in Q1 is not independently verifiable. These obligors are not publicly rated. Valuations come from the sponsor whose fees depend on them.
How exposed are the banks to private credit? Is it possible to track them all? And what are the three things to watch over the next two quarters?
Full analysis continues below for Confidential Insights paid subscribers.