MW Just a spark may light private credit on fire, warns ex-Goldman CEO Blankfein

By Jamie Chisholm

There's a lack of transparency with investors struggling to know what assets are worth

Lloyd Blankfein warned about combustible kindling in private credit

The long period without a financial crisis makes it more likely that a spark could catch the private-credit market on fire, says ex-Goldman Sachs CEO Lloyd Blankfein.

The former Wall Street titan's comments come as shares of many private credit companies have fallen sharply in recent months, as investors strive to remove their funds on fears asset values, particularly of software companies, have declined notably amid AI disruption.

Speaking to Bloomberg TV on Wednesday, Blankfein said people are currently worried about whether assets are properly valued on private credit companies' balance sheets. One of the important issues is a lack of transparency in private credit and an "inability to know what things are worth" because the assets are illiquid, said Blankfein.

This was a similar problem to what happened during the global financial crisis almost 20 years ago, according to Blankfein. It wasn't possible to know what the real value of an asset was until holders tried to sell it.

Blankfein said he was concerned that the lack of a recent financial market shakeout made the dangers of another conflagration all the greater.

"We haven't had a crisis for a long time, that itself is a reason for concern, because if you haven't had a crisis it means you haven't had a reckoning, you haven't had to sell in distress things that accumulate on your balance sheet that might not be marked correctly," he said.

Blankfein added that the long period without a financial crisis cleansing process meant "you accumulate tinder on the floor of the forest and eventually a spark will come. But the longer between intervals where there's a spark that sets it on fire, the more that accumulates."

He does not think the private-credit problems will lead to a systemic crisis that envelopes the broader financial sector, however, because banks are "in better shape" and not that much leveraged to private credit to the extent they were to mortgage derivatives in 2008.

"I'm not saying there won't be problems, but the problems won't cascade and snowball into a bigger problem," Blankfein said.

With regards to the impact on markets from war in the Middle East, Blankfein said it's particularly difficult at the moment because things can "change on a dime going from total pessimism to total optimism back to total pessimism depending on the rhetoric that's flying back and forth."

Traders should realize they currently can't be forecasters or predictors but "are really a contingency planner," needing a strategy, for example, for whether oil (BRN00) goes to $150 or back down to $70, he said.

A good thing about the current environment is that "the official sector has a lot of tools to remedy a bad economy," said Blankfein, referring in particular to the Federal Reserve's ability to trim interest rates further.

Blankfein, who is retired and in recent weeks has been promoting his memoir Streetwise: Getting to and through Goldman Sachs, said he missed being involved in what he termed crisis moments. "It's more fun," he said. "And at the end of the day you feel you've made a contribution."

-Jamie Chisholm

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March 26, 2026 08:17 ET (12:17 GMT)

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