When companies need a loan, traditionally they turn to a bank. But increasingly they’re turning to financial firms that are not really banks — but do have a lot of cash. This is called the “private credit” market. It has exploded in the past 15 years, valued now around $2 trillion.
Natasha Sarin, president of the Yale Budget Lab, argues that these private credit firms are making risky loans — so risky, they’ve got her thinking about a past financial crisis. “Ordinary people’s dollars are on the line, just like they were in 2008.”