There’s a script these things always follow. A crack appears. The institutions most exposed call it minor, contained, a preemptive move. They assure everyone the rest of the balance sheet is bulletproof. Nobody panics. And then...a few months later, they’re talking about something they swore wasn’t a problem.
JP Morgan just read from that script. Word for word.
The story, confirmed by sources close to the situation and reported by Bloomberg, is that JP Morgan has been marking down the collateral backing its loans to private credit funds and restricting new lending to those same funds. The collateral in question: loans made by private credit firms to software companies. Companies, it turns out, that the market is no longer sure have a viable business model three years from now.
This isn’t JP Morgan taking losses. That’s what they’ll tell you. This is them being “preemptive.” This is them “pumping the brakes” rather than hitting a wall.
Come on. Come on.
Does anyone remember a credit event in history that started with the institutions involved announcing that everything was on fire? Lehman wasn’t the beginning of the GFC. It was the end of the denial phase. The beginning looked exactly like this: a markdown here, a lending restriction there, a spokesperson saying “this is not systemic” into a CNBC camera.
So if JP Morgan’s collateral writedown is the smoke...what does that tell us about the fire that’s already burning inside the private credit industry?
