Jamie Dimon told investors in April that the $1.8 trillion private credit market doesn't pose a systemic risk. But a Reuters analysis of 53 publicly traded business development companies (BDCs) shows losses are piling up fast — 28 swung into the red in the first quarter of 2026, more than double the 12 that did a year earlier. Meanwhile, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo together hold more than $128 billion in exposure to private credit loans, according to their first-quarter earnings presentations.
Banking on Private Credit
Executives at Citigroup, Bank of America, and Wells Fargo used nearly identical language to describe their private credit exposures as 'comfortable.' JPMorgan alone carries roughly $50 billion in private credit exposure. Wells Fargo's 'financials except banks' portfolio totals $210.2 billion, which includes $36.2 billion in direct private credit exposure. Earlier disclosures from three major US banks had put private-credit-related financing exposure at roughly $108 billion, meaning the figure has grown.
The Boston Fed has found that banks have become a key source of funding and liquidity for private-credit lenders through subscription facilities, revolving credit lines, net asset value loans, and warehouse financing. That makes the banks' comfort level a central question as the market matures.
BDC Losses Mount
The Reuters analysis of 53 BDCs — a common vehicle for private credit — paints a different picture. Average profit among the group collapsed from positive $26 million to negative $7.6 million year-over-year. Payment-in-kind (PIK) income, where interest is paid in additional debt rather than cash, accounted for an average of 8.1% of BDC interest and dividend income in 2025, roughly double its pre-2020 share. That suggests borrowers are struggling to make cash payments.
At 14 BDCs with complete joint-venture disclosures, off-balance-sheet borrowing increased 80% during 2025 and another 14% in the first quarter of 2026. That kind of hidden leverage can amplify losses when the cycle turns, according to the Financial Stability Board.
Regulatory Warnings
The Financial Stability Board has warned that hidden or layered leverage can amplify losses when the cycle turns, and private credit remains untested at its current scale through a prolonged downturn. The FSB's available member data capture approximately $220 billion in drawn and undrawn bank lines to private credit lenders across member jurisdictions. That's a global figure, but US banks are a big part of it.
Dimon's April statement that banks would need to see very large losses before being hit hasn't been tested. The BDC losses so far are concentrated in smaller funds, but the banks' exposure is broad. The question is whether the 'comfortable' language from Citigroup, Bank of America, and Wells Fargo will hold if the downturn deepens.
No one is predicting a crisis yet. But the numbers are moving in the wrong direction, and regulators are watching.
