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JumpCrisscross | on: US private credit defaults hit record 9.2% in 2025, Fitch says
Yeah, I'm going down a bit of a rabbit hole this morning. Turns out Wells Fargo's $59.7bn of private-credit lending is equal to 44% of its CE Tier 1 capital [1]. Meanwhile, Deutsche Bank got back to being Deutsche Bank while I was not looking [2].

[1] https://www.sec.gov/Archives/edgar/data/72971/00000729712500...

[2] https://www.reuters.com/business/finance/deutsche-bank-highl...

RobRivera | parent | next
Deutsche gonna Deutsche.

Recruitment tables should just have a banner that reads 'we've already spent your bonus on legal fees, here's some chocolate'

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lumost | parent | next
With the current concentration of wealth and banking, it almost seems like there is an incentive for banks to ruin themselves when they end up in a little trouble.

If the bank has trouble, shareholders/executives lose - if the banking system has trouble... then QE will solve the bank trouble.

JumpCrisscross | root | parent | next
> If the bank has trouble, shareholders/executives lose - if the banking system has trouble... then QE will solve the bank trouble

It's a game of chicken, though. The folks at Lehman and SVB didn't cash out. JPMorgan did. (Both times. Actually, all of the times since 1907.)

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r_lee | parent
Are you saying that they're using their private-credit portfolio as a Tier 1 capitalization to meet their regulatory demands (not sure if the ~10-15 something% rule has come back yet?)

Been a bit out of the finance game

JumpCrisscross | root | parent
> they're using their private-credit portfolio as a Tier 1 capitalization

Banks' private-credit lending constitutes part of their risk-weighted assets. So yes, it's part of their CET1 [1], which is part of Tier 1 capital, and since it's equity measured it incorporates fucking everything.

4.5% is the U.S. minimum. Regulators start throwing their toys out of the pram when a bank breaches 7%. To be clear, I'm not seeing anyone in the near future breaching those limits. Deutsche Bank, the stupidest of the lot, seems to have let DB USA stuff most of the risk in its German AG.

[1] https://www.investopedia.com/terms/c/common-equity-tier-1-ce...