D. Ricardo on Private Credit & the Real Risk to Financial Markets
The Financial Accounting Standards Board’s working group voted to add loan recapture to mortgage‑servicing‑right (MSR) valuations, a move that could anchor current MSR pricing rather than lift fair values. Over the past three decades, MSRs have averaged roughly 1.5% of the unpaid principal balance of the underlying loans. In parallel, D. Ricardo’s commentary highlights how private‑credit growth—driven by post‑GFC regulatory shifts and years of ultra‑low rates—has shifted risk without expanding total debt, while AI‑focused lending and massive Nvidia insider sell‑offs expose heightened sector vulnerability. The piece warns that a lack of seasoned credit executives and inflated private‑debt structures could trigger a sharper downturn when macro pressures return.
The Wrap: Public Markets Rally; Private Credit Will Become Equity
Goldman Sachs lifted its Q1 2026 credit‑loss provision to $315 million, a near‑10% year‑over‑year rise and the highest level since 2020, driven by impairments in wholesale and corporate loans. The bank’s gross loan yield of roughly 10% outpaces peers like JPMorgan...
Private Credit and Large Banks
Banks entered Q1 2026 under heightened scrutiny over private‑credit disclosures, as investors—both institutional and retail—face losses from illiquid, mis‑sold vehicles. Goldman Sachs president John Waldron warned that private‑credit products lack clear liquidity labeling, prompting regulators to demand more transparency. While banks...
The Wrap: Hormuz Still Closed, Home Prices Stagnant to Down
The Strait of Hormuz remains closed despite a two‑week U.S.‑Iran cease‑fire, keeping global oil flows constrained and energy prices elevated. Gold futures have rebounded, the S&P 500 is trading sideways, and Bitcoin stays down year‑to‑date. In the housing sector, mortgage rates...
Goldman Sachs, Morgan Stanley & the Asset Gatherers
The Institutional Risk Analyst published a brief note asking whether major Wall Street banks such as Goldman Sachs and Morgan Stanley represent good value at current levels. The piece reveals the author’s modest position in Flagstar Bank, purchased well below...
The Wrap: Trump, Inflation and the Term Structure of Interest Rates
The Iran war with the United States and Israel has triggered a sharp risk‑off shift, prompting private‑credit managers such as Ares and Apollo to cap redemptions as investor cash‑out requests surge. Direct‑lending defaults are projected to climb from 5.6% to...
Risk Concealed: Private Credit, PIK and the Banks
Banks are increasingly financing private‑credit managers through non‑recourse loans structured via special purpose entities, expanding the sector to over $2 trillion in assets. Since 2022, accrued but uncollected interest on these loans has surged past $100 billion, while roughly 9% of private‑investment...
Countrywide II: UWMC + TWO = ? Loan Depot Flops, Again
United Wholesale Mortgage (UWMC) announced a stock‑only acquisition of Two Harbors, sending UWMC shares below $10 and sparking a shareholder vote amid a steep discount to Two Harbors' book value. The deal highlights UWMC’s reliance on mortgage‑servicing rights (MSRs), which...
Are the Money Center Banks a Buy?
Bank equities fell in January after Q4 2025 earnings, despite solid results, as investors booked profits from a rally that began in October. Citigroup emerged as the top performer among the five major depositories, but the broader money‑center segment faces heightened...