Ex-Goldman CEO Sounds Alarm on Private Credit: Could the Next Crisis Be Around the Corner?

<p>Warnings that the booming private credit market could echo past financial crises are gaining attention on Wall Street, with former Goldman Sachs CEO Lloyd Blankfein among those sounding the alarm.</p>
<p>"It sort of smells like that kind of a moment again," Blankfein said, referring to the 2008 financial crisis. "I don't feel the storm, but the horses are starting to whinny in the corral." He made the remarks during an interview with Citadel Co-Chief Investment Officer Pablo Salame on Bloomberg's <a href="https://www.youtube.com/watch?v=Z_4uaToYgT8">"The Big Take" podcast</a> released earlier this month.</p>
<p>Blankfein's comments come as <a href="https://www.benzinga.com/news/financing/26/03/51109246/blackrock-blinked-now-everyone-is-watching-blackstone-apollo-and-kkr?nid=51305570&amp;utm_campaign=partner_feed&amp;utm_content=site&amp;utm_medium=partner_feed&amp;utm_source=yahooFinance">private credit has expanded rapidly over the past decade</a> and become a major source of corporate financing outside traditional banks. The remarks <a href="https://www.benzinga.com/markets/equities/26/03/51090141/owl-stock-is-down-over-30-this-year-how-private-credit-meltdown-is-exposing-cockroaches-in-the-market?nid=51305570&amp;utm_campaign=partner_feed&amp;utm_content=site&amp;utm_medium=partner_feed&amp;utm_source=yahooFinance">add to growing concern</a> on Wall Street that the industry's rapid growth may be masking risks.</p>
<p>Don't Miss:</p>
<h2>Private Credit Draws Comparisons To 2008</h2>
<p>Analysts point to <a href="https://www.benzinga.com/markets/equities/25/10/48011316/top-short-seller-jim-chanos-sounds-alarm-after-first-brands-bankruptcy-says-could-trigger-a-wave-of-corporate-collapses-should-be-the-first-red-flag?nid=51305570&amp;utm_campaign=partner_feed&amp;utm_content=site&amp;utm_medium=partner_feed&amp;utm_source=yahooFinance">aggressive lending and complex deal structures</a>.. Late last year, the bankruptcies of <a href="https://www.benzinga.com/markets/equities/25/10/48120397/jefferies-exposed-to-715-million-in-collapsing-first-brands-debt-analyst-warns-of-fallout?nid=51305570&amp;utm_campaign=partner_feed&amp;utm_content=site&amp;utm_medium=partner_feed&amp;utm_source=yahooFinance">First Brands Group</a> and Tricolor Holdings, both tied to private credit, forced several banks to disclose large write-offs and raised fears that losses could ripple through financial markets.</p>
<p>The concerns are <a href="https://www.cnn.com/2026/03/06/business/private-credit-blue-owl-2008-nightcap">drawing comparisons to the 2008 financial crisis</a>. Distress in subprime mortgages helped trigger that collapse, which sent global markets plunging and pushed the U.S. economy into its <a href="https://www.investopedia.com/articles/economics/09/subprime-market-2008.asp">deepest downturn since the Great Depression</a>.</p>
<p>Market <a href="https://seekingalpha.com/article/4828071-the-2-trillion-subprime-risk-of-2025-what-you-should-know-about-private-credit">analysts note that the private credit market</a> has grown to roughly the same size as the subprime mortgage market reached before the crash.</p>
<p>Blankfein, who led Goldman Sachs from 2006 to 2018, said long periods of strong markets can lead investors to take on more risk.</p>
<p>"The markets have been very good for a very long time," he said on the podcast. "If everything is always good and there’s no cost, no adverse consequences, you start to lose discipline over time," he added, warning that the erosion of discipline can quietly build risks inside financial markets.</p>
<p>Trending: <a href="https://www.benzinga.com/money/discover/no-retirement-savings-experts-reveal-5-smart-moves-people-wish-they-knew-sooner?nid=51305570&amp;utm_campaign=partner_feed&amp;utm_content=site&amp;utm_medium=partner_feed&amp;utm_source=yahooFinance">Skip the Regrets: The Essential Retirement Tips Experts Wish Everyone Knew Earlier.</a></p>
<h2>Opaque Assets And Hidden Risks</h2>
<p>Valuing private credit investments can also be difficult because the loans rarely trade in active markets. Unlike publicly traded securities, private loans often change hands infrequently, making it harder for investors to determine whether assets are properly priced.</p>