I recently wrote Private Credit Winter about the daisy chain of creative accounting and subterfuge in the private credit and private equity (PE) space, and how the tentacles spread through highly leveraged public markets and retirement accounts. The segments below elaborate further. This is what happens when we let salespeople set risk management rules.

Apollo Global Management reinvented how pensions could be managed and paid out — by taking them over and moving the risks offshore. Other firms have followed suit and ushered hundreds of billions of dollars in American retirement savings into accounts that retirees and economists say are exposed to higher risk.

On today’s Big Take podcast, host Sarah Holder sits down with Bloomberg reporters Alex Rajbhandari and Tom Schoenberg, who investigated this phenomenon and explain what it means for the people whose nest eggs ended up on private equity’s opaque balance sheets. Here is a direct audio link. 

Also, see Private Credit Loss Rates mark ‘decline in standards’.

Chris Whalen, chairman of Whalen Global Advisers, says that the considerable loss rates he sees in private credit marks a ‘decline in standards’ in the investment landscape and that much of the damage goes on behind the scenes as private equity firms try to extract value out of investments.