Banks Holding the Line.. But the 'Lemons' Sit Off the Chart. In Private Credit, Credit Unions, and Non-Bank Consumer Lenders.
Published: May 29, 2026
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.
Full Deck Content (Text Format)
Text below was extracted from the source deck. Chart visuals stay in the PDF and as slide images above the post.
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.
Working on something similar? How I work covers the rates, the availability and what I take on.