One of the biggest signals from big bank earnings is the resounding support that one genre of investment is scoring from industry leaders, even as it faces an onslaught of controversy.

Per Bloomberg, banks reported “at least $100 billion” of exposure to private-credit firms in earnings this week in their earnings. These large financial institutions are some of the biggest wholesale lenders to private-credit firms, which use their money to facilitate lending.

JPMorgan Chase ($50 billion), Wells Fargo ($36.2 billion), and Citigroup ($22 billion) were the largest lenders. However, the CEO of the largest lender said he wasn’t worried. His viewpoint is not singular.

JPMorgan’s Dimon: “Not worried”

JPMorgan Chase CEO Jamie Dimon struck a more cautious tone, weeks after the bank was reportedly reining its direct lending. Data showed that the bank had done over $50 billion in direct lending exposure to private credit firms.

Dimon had previously warned of “cockroaches”, or failed deals. And where there’s one, there’s likely many. Despite that, Dimon indicated that it wasn’t a big worry for him on the company’s earnings call.

“You have to have very large losses in private credit before … banks are going to get hit,” Dimon said. “It doesn’t mean you won’t feel some stress and strain, and that you might have to do something about it, but I’m not particularly worried about it.”

BlackRock CEO Larry Fink: Institutions are in

BlackRock has an incentive to tell a story, seeing how it is a serious player in the private credit space. However, its $210 billion private credit portfolio pales in comparison to its $13.89 trillion in assets under management, so with a grain of salt, you can probably take the world’s largest asset manager at its word.

On its earnings call this week, BlackRock’s Larry Fink says that despite retail investors pulling back, institutional demand for private credit has accelerated. On the company’s Q1 earnings call, Fink said that the attention and headlines on the sector, “do not reflect what clients are telling us, what our portfolio data shows, or where we see the market going.”

Blackstone Private Wealth Head: “We’re still outperforming”

Blackstone is another one of the private credit industry’s biggest names, so there’s an incentive to tout your book. Joan Solotar, the global head of Blackstone Private Wealth, makes the case that despite uncertainty in the industry, they are still “outperforming.”

That statement comes after the firm’s flagship private credit fund posted its first monthly loss since Sept. 2022 in March; an impressive streak of success. However, as the BCRED fund wrote down loans, there are still worries about underwriting in the industry.

There are still skeptics

That’s not to say that the private credit business doesn’t have its naysayers.

In an interview with CNBC, Carlyle CEO said that uncertainty around the private credit business will persist “for some time” given the scale of redemption requests and the possible impact of AI on software businesses.

There are some who are a little more prescriptive, such as Saba Capital Management’s Boaz Weinstein. Weinstein’s firm launched a tender offer to investors who were stuck holding an illiquid private credit fund after it halted quarterly redemptions and made the decision to liquidate the fund.

Weinstein says that although he’s bullish on the space, there is an evident mismatch between available liquidity which is “multiplying by the quarter.”

And then there are those who think it’s all doomed to come crashing down, like Yale Law professor Natasha Sarin, who penned an opinion piece in The New York Times about a week ago.

Sarin’s viewpoint is less common among the financial-types. But in fairness, the comparisons to the 2008 financial crisis — although grating to shadow banks — are understandable. Back then, folks didn’t think mortgage bonds could or would fail.

Maybe the one thing that private credit has going for it is that there is a vast discourse around whether or not it stands the test of time.

The market speaks

As the market has turned a corner in recent weeks, so too have private credit firms like Blue Owl, Apollo Global Management, and Ares Management Corp. In just the last five trading days, they’ve added 17%, 13.8%, and 12% respectively.

Those returns only take a small bite out of some of the year-to-date declines, which has come as the contentions around the private credit space have mounted.