In the 1965 movie The Agony and the Ecstasy, staring Charlton Heston as Michelangelo and Rex Harrison as Pope Julius II, Michelangelo’s regular and frequent answer to the Pope’s question of “When will you make and end?” (painting the Sistine Chapel), is, “When I am finished.” Michelangelo painted the Sistine Chapel ceiling from 1508 to 1512, a span of about four years, which was actually fast for the scale of the work. A few reasons it took that long starts with the sheer scope of the project… over 5,000 square feet of ceiling, covering hundreds of figures across nine central scenes from Genesis plus prophets, sibyls, and ancestors of Christ. He used a fresco technique, painting on wet plaster (buon fresco), which sets quickly. That meant that sections had to be planned and completed within hours before the plaster dried, so mistakes couldn’t easily be fixed. It was physically difficulty work, standing on custom-built scaffolding, reaching up overhead for hours at a time, straining his neck, back, and eyes. Michelangelo was mostly untested as a fresco painter. He considered himself primarily a sculptor and had little fresco experience going in, so there was a real learning curve, especially early on (parts of the first scenes had to be redone). He worked largely alone on the figures themselves, with only a small team for menial tasks like grinding pigment and mixing plaster, unlike typical workshop-heavy fresco projects. There were also constant interruptions (the agony per the movie), including funding issues, disputes with the Pope, and Michelangelo’s own frequent trips to Rome to argue about payment and timeline all serving to slow things down.
I have always had a pedagogical nature. During my career I was often asked to give speeches and explain the many new concepts and products that I found myself always involved with. I guess its fair to say that I like teaching, which is a natural for me to move into teaching after a career on Wall Street. As I’ve mentioned many times, I consider being a professional to be my main career calling and storytelling to be my main personal calling. Combine those two and you have the key elements of teaching complex business topics to other professionals. While I have stopped teaching graduate classes (after 10 years as a Clinical Professor at Cornell and three years as an Adjunct Professor at USD), I still teach the expert witness masterclass every year for my firm, and I occasionally write an article for their online newsletter on some new financial event or topic. They have recently asked me to co-lead a workshop for large litigation firms on the topic of the litigation issues likely to arise from the current activities in the private credit market.
I was a banker for almost 50 years so it is a natural topic for me since private credit’s history is really a story of banks retreating and non-bank lenders filling the gap. I was there when commercial paper started to replace short-term bank lending (their bread and butter) in the 1970s. I was also there when our bank and several others that were not big deposit-takers started figuring out how best to syndicate loans and get out of just being a balance sheet lender. The Eurodollar boom in those years also gave impetus on the international scene for syndicated lending and gave rise to large capital flows of petrodollars through banks as arrangers to the borrowers in the developing world. That practice that lead to the LDC Crisis in the early/mid 1980s is a whole story unto itself, and one that I have a lot of direct involvement in. But in the U.S. market, the whole origination and syndication game with loans was a tricky maneuver because the regulatory framework that separated commercial and investment banking (The Glass Steagall Act) made turning bank loans into tradable assets challenging. Direct lending to companies outside the banking system wasn’t entirely new as merchant banks and insurance companies did privately negotiated loans for decades. But “private credit” as a distinct asset class really emerged in the 1980s–90s alongside the growth of leveraged buyouts, when mezzanine funds and specialty finance firms started providing subordinated debt that banks wouldn’t touch. Meanwhile, the boom in private equity was starting to crest and the small firms that had become mega firms (KKR, Apollo, Blackstone, etc.) were looking for new horizons to conquer. The real catalyst for private credit was the 2008 Global Financial Crisis. This was the inflection point. Post-crisis bank regulation, Dodd-Frank, Basel III capital requirements, and the Fed’s leveraged lending guidance, all made it far more expensive and risky for banks to hold middle-market and leveraged loans on their balance sheets. Banks pulled back from lending to smaller, riskier, or more complex borrowers. Private credit funds (many staffed by ex-bank leveraged-finance bankers) stepped into that vacuum, offering direct loans funded by institutional capital like pensions, insurers, and endowments, which were all chasing yield in a near-zero-rate world. Given the events of the Global Financial Crisis (another crisis I found myself very much in the middle of), it was ironic that this gave winds to private credit, as my story will explain.
After 2010, the institutionalization of direct lending became a dominant strategy for the investment banking world, increasingly dominated by those mega PE managers. Funds lending directly to mid-market companies (often PE-sponsor-backed), holding loans to maturity rather than syndicating them, made sense on many levels. BDCs (business development companies that were able to go public) proliferated as a vehicle to give this exposure a semi-liquid, retail-accessible wrapper. Rates stayed low, defaults stayed low, and returns looked attractive relative to public credit, so capital poured in. By the start of the 2020s this had become very much mainstream and massive rising rates after 2022 made private credit’s floating-rate structure especially attractive, so the asset class exploded even further. The global private credit market reached roughly $3.5 trillion in assets under management according to 2025 industry research, up from a few hundred billion a decade earlier. The largest private credit platforms grew AUM at roughly 20% annually from 2022 to 2025. Growth has broadened beyond corporate direct lending into asset-based finance, real estate, and infrastructure credit, and Europe now accounts for close to 30% of global private credit AUM.
Where it stands now in 2026 is starting to look quite different. The asset class is maturing into something structurally important and drawing real scrutiny due to its size and some cracks that have inevitably started to appear. Regulators recently opened the roughly $13 trillion U.S. defined-contribution retirement market to private credit managers, and evergreen/semi-liquid vehicles aimed at retail and wealth investors are growing fast. But 2026 is being described as private credit’s first big stress test since the 2008 crisis, with most portfolio managers citing competition and credit losses as the top concerns and expecting flat-to-lower returns. The core open question is whether private credit’s low historical default and mark-to-model valuation methods reflect genuinely lower risk, or simply less price transparency and less tested performance through a real downturn. This explains why I’ve been asked to address the topic to litigation firms that want to gear up for the coming party.
While I left Wall Street in 2007, between teaching and becoming a borrower of private credit, I’ve very much stayed involved in the topic. What’s funny is that one of the big cracks in the private credit system is being driven by AI and its impact on the tech sector and SaaS companies that have been big borrowers of private credit. And it is that same AI that I am working with to prepare my lectures and workshops on the topic, finding it ecstasy to compile the agony that is coming.