# Private Credit Is Working. The Center for American Progress Hopes You Don't Notice.

Published: 2026-10-26

The Center for American Progress (CAP) wants you to be worried about private credit. Its [new report](https://www.americanprogress.org/article/what-is-private-credit-and-why-should-americans-care/) builds a case against an asset class that lends to American businesses that banks often pass over. Then they wait until the 20th paragraph to admit it’s ["not currently in danger of causing a financial crisis."](https://www.americanprogress.org/article/what-is-private-credit-and-why-should-americans-care/)

After burying the lede, here's what else CAP would rather skip.

Solid Regulation

The regulatory environment has changed significantly since the financial crisis, and policymakers have taken steps to protect the financial system. As Pinpoint [has documented](/the-point/top-u-s-economic-leaders-on-private-credit-no-evidence-of-systemic-problem/), America’s top economic officials have repeatedly said on the record that they see no systemic problem. Former Federal Reserve Chair Jerome Powell [said](https://money.usnews.com/investing/news/articles/2026-03-30/fed-watching-private-credit-sector-for-signs-of-trouble-powell-says) private credit "doesn't seem to have the makings of a broader systemic event," Treasury Secretary Scott Bessent [has said](https://www.cnbc.com/2026/04/15/cnbc-transcript-us-treasury-secretary-scott-bessent-spoke-with-cnbcs-sara-eisen-at-cnbcs-invest-in-america-forum-in-washington-dc-today-wednesday-april-15.html) "none of our work has shown that there would be a systemic problem," and SEC Chair Paul Atkins [said](https://www.ft.com/content/9bde1fe8-059c-4c68-bf19-5ef7a36eab22?syn-25a6b1a6=1) that "it is not a systemic risk." The Committee on Capital Markets Regulation [just found](https://capmktsreg.org/wp-content/uploads/2026/09/CCMR-Private-Credit-and-Bank-Interconnectedness-09.24.26.pdf) that interconnectedness risk from bank lending to private credit funds is limited, with no statistically significant relationship between a bank's exposure and measures of systemic risk.

Built to Hold

Banks borrow short and lend long, but private credit doesn't have that mismatch. Most funds are [financed](https://capmktsreg.org/wp-content/uploads/2026/09/CCMR-Private-Credit-and-Bank-Interconnectedness-09.24.26.pdf) with long-term capital locked up for a set period, and even those that offer redemptions have caps that protect all investors and prevent fire sales.

Funds Main Street

Private credit fills a gap banks leave. It supports small and mid-sized businesses, [offering](https://www.privateinvestmentworks.com/2026/06/23/why-private-credits-patient-capital-model-works-for-borrowers-investors-and-the-economy/) the customization, flexibility, and expertise they need to thrive. Loan terms can be built around a company's actual cash flow, and borrowers deal with one lender instead of a crowd.

Unfounded Scare Story

[Proskauer's private credit index](https://www.proskauer.com/report/proskauers-private-credit-default-index-reveals-rate-of-251-for-q2-2026) put defaults at 2.51 percent in the second quarter, down from 2.73 percent in the first, which a Proskauer partner says [“reinforces the resilience”](https://www.proskauer.com/report/proskauers-private-credit-default-index-reveals-rate-of-251-for-q2-2026) of the market. Valuations [follow](https://www.privateinvestmentworks.com/2026/07/29/correcting-the-record-the-new-york-times-misstates-basic-facts-about-private-credit/) a disciplined, standards-based process with audited financials and increasingly independent third-party validation.

Key for Diversification

In a [recent survey](https://www.investmentcouncil.org/survey-more-than-8-in-10-investors-view-private-credit-as-a-key-source-of-income-and-diversification/), 88 percent of institutional investors and 81 percent of advisers called private credit an important source of income and diversification, and 85 percent plan to maintain or increase their exposure. Public pensions are [still investing](https://www.privateinvestmentworks.com/2026/07/17/what-they-are-saying-public-pension-funds-continue-to-back-private-credit/), including up to $2 billion from CalSTRS and a proposed $600 million from New Jersey's pension division.

Better Retirement Options

The underlying theme of the CAP report is [pushing](https://www.americanprogress.org/article/what-is-private-credit-and-why-should-americans-care/) to put the Trump Labor Department's 401(k) proposal on hold, as if savers were about to be dumped into unvetted assets. The [proposed rule](https://www.federalregister.gov/documents/2026/03/31/2026-06178/fiduciary-duties-in-selecting-designated-investment-alternatives) is [asset-neutral and process-based](/the-point/heres-what-the-trump-dol-rule-on-401k-alternative-assets-actually-does/), and to qualify for its safe harbor, a fiduciary has to objectively, thoroughly, and analytically weigh six factors: performance, fees, liquidity, valuation, benchmarking, and complexity. Those factors apply to any investment option, not just alternatives.

And the payoff is real. Georgetown's Center for Retirement Initiatives says private assets can [enhance risk-adjusted returns](https://cri.georgetown.edu/wp-content/uploads/2025/08/Addressing-the-myths-about-private-assets.pdf), and found that even modest diversification [can improve retirement income by 6 to 8 percent](https://cri.georgetown.edu/wp-content/uploads/2025/08/Addressing-the-myths-about-private-assets.pdf). Workers should have the same opportunities to diversify that wealthy and institutional investors have had for decades.

Conclusion

Endowments, public pensions, and major investors have had access to private credit for years. Liberal Washington think tanks want to keep that door shut. American savers deserve better.

More from Pinpoint:

- [Top U.S. Economic Leaders on Private Credit: No Evidence of Systemic Problem](/the-point/top-u-s-economic-leaders-on-private-credit-no-evidence-of-systemic-problem/)

- [Here’s What the Trump DOL Rule on 401(k) Alternative Assets Actually Does](/the-point/heres-what-the-trump-dol-rule-on-401k-alternative-assets-actually-does/)

- [A Reality Check for Private Credit Alarmists From Treasury’s Office of Financial Research](/the-point/a-reality-check-for-private-credit-alarmists-from-treasurys-office-of-financial-research/)