# Banks Holding the Line.. But the 'Lemons' Sit Off the Chart. In Private Credit, Credit Unions, and Non-Bank Consumer Lenders.

Published: 2026-05-29

FDIC Q1 2026 NCO chart shows US banks holding the line at 0.58%, right at pre-GFC. Real Estate (45% of book) at 0.05% vs 2.50% GFC peak. Consumer at 2.87% (vs 6.64% GFC). C&I 0.52% (vs 2.69%). But the credit stress is in two places the bank NCO chart doesn't show. First: private credit, which is mark-to-market and hits P&L directly, never flowing through to NCO. Bank loans to non-bank lenders crossed ~$1.6T (FFIEC) with about a quarter being private credit. DOJ probing BlackRock fund valuations, FSB/BoE/ECB all warning on data gaps, opacity and spillover risk. Second: credit unions and non-bank consumer lenders. NCUA consumer NCO at 1.82% (nearly 2x pre-crisis), cards at 5.11% past the 4.68% GFC peak, used vehicle loans at the highest on record. Non-banks carrying the weakest paper. Single-image chart post with Q1 2026 numbers across the bank book - Total Loans 0.58%, Real Estate, Consumer, C&I segments and All Other.

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## Tags
portfolio-quants

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## Full analysis transcript (extracted from PDF deck)

_This text was extracted from the source PowerPoint deck. Chart visuals (referenced as "no text content - see PNG at /files/...") are in the PDF and slide images on the HTML page._

Banks holding the line... but the **'lemons' sit off the chart.** In private credit, credit unions and non-bank consumer lenders.

The chart shows US bank NCO **right at pre-GFC**. Real Estate, the biggest chunk, is holding well. Consumer and C&I inching up but nothing terrible.

The stress on the financial system is in **two places the bank NCO doesn't show.**

**1/ Private credit.**

Marked to market, hits P&L directly. Doesn't flow through to NCO. DOJ probing valuation marks at a BlackRock private credit fund. FSB warning on data gaps, valuation and opacity. Bank of England calling it a **'market for lemons'**. ECB flagging it as a spillover risk to the euro area. Bank loans to non-bank lenders crossed **~$1.6T (FFIEC)** - about a fourth is private credit. Insurers in deep too.

**2/ Credit unions and consumer outside the bank.**

Credit union consumer NCO at **1.82%**, nearly 2x pre-crisis. Cards at **5.11%**, past the 4.68% GFC peak. NCUA itself flagging cards past GFC peak, used vehicle loans at highest on record. Non-banks carrying the weakest paper.

Detailed analysis at tigzig.com/analysis.

![FDIC Q1 2026 - Banks Holding the Line. NCO 0.58% right at pre-GFC. Lemons sit off the chart in private credit and credit unions / non-bank consumer lenders.](/images/blog/banks_holding_line_lemons_off_chart.png)