Odd Lots · Friday, July 31, 2026
The podcast discusses how private credit, after growing significantly post-2008 by moving risk out of regulated banks, is now migrating into the insurance industry. This shift raises concerns about who ultimately bears losses, as insurance, unlike traditional bank deposits, is not fully protected by deposit insurance or taxpayer bailouts.
“And that's what basically happened, right. We moved risk out of the regulated banking system into private credit. Yeah, which seems fine, Like, all right, risky loans, all that middle company deposit holders don't have to worry, right exactly if risk is now migrating back into another regulated financial industry that we do care about for the reasons you just stated, which would be insurance. That doesn't seem ideal either, right, having credit risk migrate out of the banks into private credit, and then having private credit migrate into insurers.”
“Ideally by the way you invest in something that doesn't have negative externalities for other people. But you know, let's just focus on the lost portion for a second. Yeah.”
“But as we mentioned before, it does open up this whole new can of worms about losses and who actually bars those losses. So this is what we're going to be discussing, right, the insurance private equity private credit nexus in excruciating detail.”