In a financial world that’s still haunted by the ghosts of 2008, the newest trend sweeping Wall Street is raising eyebrows—and billions of dollars.
It’s called private lending, and even though it makes some of the industry’s most experienced voices nervous, JPMorgan Chase is diving in headfirst with a massive $50 billion commitment.
Jamie Dimon Sounds the Alarm, Then Buys In
Jamie Dimon, the man widely viewed as America’s most respected banker, has made no secret of his worries.
He’s compared the explosive growth in private loans to the subprime mortgage crisis that triggered the global meltdown in 2008.
Back then, banks handed out risky home loans to people with shaky credit, and when the rates spiked, the housing market collapsed like a house of cards.
So it might surprise you to hear that Dimon’s JPMorgan is now doubling down on the very thing he warns could lead to “hell to pay.”
The twist? He’s trying to make the most of it while playing it safe.
What Is Private Lending and Why Is It Growing?
Private lending isn’t your typical bank loan. It’s a direct deal between borrowers and non-bank lenders, often at higher interest rates and looser terms.
Companies that banks would normally reject can turn to these private lenders, avoiding strict credit checks and regulations.
That flexibility is exactly what’s made private credit explode into a $700 billion industry—and counting.
It all really took off around 2015, when private equity firms—flush with pension fund money—started eyeing new ways to earn.
Lending to debt-laden businesses, despite the risk, was one of them.
Why Everyone’s Watching This Closely
On the surface, it looks like a win-win. Businesses get more cash than they’d get from traditional banks, and private lenders score big on interest.
But here’s the catch: those interest rates are often 2–3% higher, according to the Fed’s 2024 data.
And while defaults have been low so far, many economists worry that could change fast if a recession hits.
Dimon has been wary from the start. Back in 2021, he was already calling it a potential bubble and warning that it needed to be “closely watched.”
And yet, even with those red flags, JPMorgan is now putting $50 billion on the table.
Playing Both Sides of the Risk
So why would someone like Dimon, who’s clearly worried, make such a bold move? It comes down to strategy.
JPMorgan isn’t handing out loans blindly—they’re offering clients a choice between traditional lending or private credit options, tailoring the risk depending on the business and the market climate.
The bank has already deployed over $10 billion in private deals across more than 100 transactions since 2021.
Now, it’s scaling up big time, aiming to lead both traditional and private lending markets while still collecting interest and holding onto the loans until they mature.
Preparing for a Crash, Just in Case
Dimon’s approach is also informed by lessons from the past.
During the 2008 crisis, a handful of savvy investors actually made billions by betting against the very loans that were failing.
Dimon sees a similar opportunity—one where JPMorgan could still come out on top even if the market collapses.
If a crisis hits and private loans go south, JPMorgan won’t be caught off guard.
They’re setting themselves up to benefit from both the boom and the potential bust.
Market Pressure Is Driving the Move
Analysts say there’s also pressure from clients. According to Evercore’s Glenn Schorr, banks like JPMorgan can only stand on the sidelines for so long while private credit balloons into a trillion-dollar industry.
Eventually, the demand becomes too loud to ignore.
“This is what clients are asking for,” Schorr said. And when your clients want something, especially at this scale, even the most cautious banks have to adapt.
In a financial world that’s still haunted by the ghosts of 2008, the newest trend sweeping Wall Street is raising eyebrows—and billions of dollars.
It’s called private lending, and even though it makes some of the industry’s most experienced voices nervous, JPMorgan Chase is diving in headfirst with a massive $50 billion commitment.
Jamie Dimon Sounds the Alarm, Then Buys In
Jamie Dimon, the man widely viewed as America’s most respected banker, has made no secret of his worries.
He’s compared the explosive growth in private loans to the subprime mortgage crisis that triggered the global meltdown in 2008.
Back then, banks handed out risky home loans to people with shaky credit, and when the rates spiked, the housing market collapsed like a house of cards.
So it might surprise you to hear that Dimon’s JPMorgan is now doubling down on the very thing he warns could lead to “hell to pay.”
The twist? He’s trying to make the most of it while playing it safe.
What Is Private Lending and Why Is It Growing?
Private lending isn’t your typical bank loan. It’s a direct deal between borrowers and non-bank lenders, often at higher interest rates and looser terms.
Companies that banks would normally reject can turn to these private lenders, avoiding strict credit checks and regulations.
That flexibility is exactly what’s made private credit explode into a $700 billion industry—and counting.
It all really took off around 2015, when private equity firms—flush with pension fund money—started eyeing new ways to earn.
Lending to debt-laden businesses, despite the risk, was one of them.
Why Everyone’s Watching This Closely
On the surface, it looks like a win-win. Businesses get more cash than they’d get from traditional banks, and private lenders score big on interest.
But here’s the catch: those interest rates are often 2–3% higher, according to the Fed’s 2024 data.
And while defaults have been low so far, many economists worry that could change fast if a recession hits.
Dimon has been wary from the start. Back in 2021, he was already calling it a potential bubble and warning that it needed to be “closely watched.”
And yet, even with those red flags, JPMorgan is now putting $50 billion on the table.
Playing Both Sides of the Risk
So why would someone like Dimon, who’s clearly worried, make such a bold move? It comes down to strategy.
JPMorgan isn’t handing out loans blindly—they’re offering clients a choice between traditional lending or private credit options, tailoring the risk depending on the business and the market climate.
The bank has already deployed over $10 billion in private deals across more than 100 transactions since 2021.
Now, it’s scaling up big time, aiming to lead both traditional and private lending markets while still collecting interest and holding onto the loans until they mature.
Preparing for a Crash, Just in Case
Dimon’s approach is also informed by lessons from the past.
During the 2008 crisis, a handful of savvy investors actually made billions by betting against the very loans that were failing.
Dimon sees a similar opportunity—one where JPMorgan could still come out on top even if the market collapses.
If a crisis hits and private loans go south, JPMorgan won’t be caught off guard.
They’re setting themselves up to benefit from both the boom and the potential bust.
Market Pressure Is Driving the Move
Analysts say there’s also pressure from clients.
According to Evercore’s Glenn Schorr, banks like JPMorgan can only stand on the sidelines for so long while private credit balloons into a trillion-dollar industry.
Eventually, the demand becomes too loud to ignore.
“This is what clients are asking for,” Schorr said.
And when your clients want something, especially at this scale, even the most cautious banks have to adapt.