Money Is Flying Out of Private Credit. That’s Bad News for Wall Street.

Summary

---

WSJ What’s News – PM Edition

Episode Title: Money Is Flying Out of Private Credit. That’s Bad News for Wall Street.
Date: March 13, 2026
Host: Alex Osulla (The Wall Street Journal)

---

Overview

This episode explores the sudden rush of redemptions from private credit funds, what’s driving investor panic, and what it means for Wall Street’s booming private credit industry. The Wall Street Journal’s Matt Wirtz joins Alex Osulla to explain the mechanics and implications of this unprecedented squeeze. In addition, the episode dives into how the war between Iran and the U.S. is stirring economic uncertainty, the latest on a federal probe into Fed Chair Jerome Powell, and the explosion of Oscars betting on new prediction markets.

---

Private Credit Panic: What’s Happening and Why (04:00–06:40)

What is Private Credit?

• Private credit refers to loans made by private fund managers—usually to corporations, financial institutions, and sometimes consumers—that banks once dominated.
• These investment products are mostly sold to individuals via funds that restrict the speed and size of withdrawals, unlike mutual funds.
• “The assets in the funds are these private loans that are actually kind of hard to sell. So it’s a structure that makes sense.”
  — Matt Wirtz, 04:30

The Rush to Withdraw

• Recently, more and more investors have rushed to redeem their money from these funds, sparking concern across Wall Street.
• Investors’ fears snowballed as they realized redemptions weren't always possible on demand, prompting a “get out first” mentality.
• “Redemption started to go up, and then all of a sudden investors, at least some of them, woke up to the fact that, oh wait, I might not be able to get all my money out when I want it. I better put in for it now. And then it just kind of built and built.”
  — Matt Wirtz, 00:37 (reiterated at 05:25)

Catalysts for Panic

• The tipping point was a series of “strange little frauds” in companies like First Brands and Tree Color, which sparked investor fears throughout the credit markets.
• Behavioral economics—herd mentality—has driven the sell-off, as investors want out before the crowd.
• “This seems to be a lot about investor psychology. There’s this belief I need to get out before everyone else gets out.”
  — Matt Wirtz, 05:25

Outlook

• Analysts predict Q2 2026 redemptions will be even worse than Q1, possibly peaking then.
• This crisis highlights the risks of expanding private credit funds into retail channels, such as 401(k)s, without proper investor education.
• “This, what we're seeing now, shows the dangers of doing that without having the right structure and the right education in place.”
  — Matt Wirtz, 06:17

---

Economic Pressure from the Iran War (01:52–03:04)

Updated Economic Data

• U.S. GDP for late 2025 revised down to 0.7% growth.
• January’s PCE Price Index (Fed’s preferred inflation gauge) was 2.8%—down slightly but still over target.
• “As everyone who's driven in the last couple of weeks knows, gas prices are already a lot higher.”
  — Matt Grossman, 01:52

War’s Impact on Policy

• The Iran war has driven a sharp rise in oil prices—Brent crude soaring over 40% in two weeks.
• Inflation data may become less relevant as war-fueled cost increases ripple through the economy.
• “The fear would be that not only does that translate into higher gas prices, but higher prices for everything else too, because so much of what we buy has to get shipped.”
  — Matt Grossman, 02:17

Stock Market Response

• The Nasdaq down 0.9%; all major U.S. indexes end the week lower.
• The Dow sees the sharpest weekly decline (-0.2%).

---

Federal Probe and Policy Developments (08:04–09:04)

Justice Department vs. Fed Chair Powell

• A federal judge quashed DOJ subpoenas to the Fed, calling them “improper” and meant to pressure Powell.
• DOJ opened a criminal investigation into alleged false testimony to Congress.
• The judge’s conclusion:
  “The purpose of the subpoenas was, quote, to harass and pressure Powell either to yield to the president or to resign.”
  — Judge’s decision, summarized at 09:04

Global Policy Tensions

• Pentagon sends more Marines and warships to the Middle East in response to Iran’s actions in the Strait of Hormuz.
• U.S. and European allies split over easing Russia sanctions: “Six out of seven [G7 leaders] were clearly the opinion that we should not release the sanctions against Russia. And we were a little bit surprised that we heard this morning that the American government decided differently.”
  — German Chancellor Friedrich Merz, 08:37

---

Prediction Markets & Oscars Betting Explosion (09:04–11:37)

The Rise of Prediction Markets

• New platforms like Kalshi and Polymarket have brought Oscars betting—once a party game—into serious financial territory; over $100 million has been wagered.
• People bet not only on official Oscar categories (24 total) but also on side bets (celebrity moments, speeches, etc.).
• “Pretty much anything you can imagine that might be at the Oscars, people are betting on it.”
  — John Jurgensen, 10:19

Who is Betting, and On What?

• Most users are casual—small bets ($5-$20)—though volume is large.
• The Best Picture race sees the heaviest action:
  “The trading and betting is really circulating around the two front runners, Sinners and One Battle after Another.”
  — John Jurgensen, 11:08

Market Favorites

• Jurgensen’s pick:
  “I do think it's gonna be One Battle. Paul Thomas Anderson's a really respected filmmaker and people think it's kind of like, quote, unquote, his time. But Sinners has made a really strong showing and it really could pull someone out.”
  — John Jurgensen, 11:25

---

Notable Quotes & Memorable Moments

• On private credit psychology:
  “There’s this belief I need to get out before everyone else gets out.”
  — Matt Wirtz, 05:25

• On the impact of war on Fed policy:
  “As everyone who's driven in the last couple of weeks knows, gas prices are already a lot higher.”
  — Matt Grossman, 01:52

• On global sanctions split:
  “We were a little bit surprised that we heard this morning that the American government decided differently.”
  — German Chancellor Friedrich Merz, 08:37

• On the Oscars betting surge:
  “Pretty much anything you can imagine that might be at the Oscars, people are betting on it.”
  — John Jurgensen, 10:19

---

Timestamps for Key Segments

• Private Credit Meltdown: 00:37–06:41
• Economic Data & Iran War: 00:50–03:04
• Pentagon and DOJ/Fed News: 07:43–09:04
• Oscars Prediction Markets: 09:04–11:37

---

Conclusion

This episode underscores the fragility and risks inherent in today’s booming private credit industry, particularly for individual investors enticed by high yields. War in the Middle East adds further uncertainty to both markets and Fed policy. Meanwhile, the democratization of prediction markets is reshaping how people interact with events like the Oscars, with real money on the line. The episode stays tightly focused on major business and global headlines, offering a succinct wrap-up for listeners seeking the high points that move markets.

---

Transcript

[Alex Osulla]

This episode is brought to you by indeed. Stop waiting around for the perfect candidate. Instead, use Indeed sponsored Jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate. C According to Indeed data, Sponsored jobs have four times more applicants than non sponsored jobs. So go build your dream team today with Indeed. Get a $75 sponsored job credit@ Indeed.com podcast. Terms and conditions apply. Money is pouring out of private credit, and some investors are finding it's complicated to pull their cash.

[Matt Wirtz]

Redemption started to go up, and then all of a sudden investors, at least some of them, woke up to the fact that, oh wait, I might not be able to get all my money out when I want it. I better put in for it now. And then it just kind of built and built.

[Alex Osulla]

Plus, a federal judge throws out subpoenas issued to the Federal Reserve in a heavy blow to the Justice Department's criminal investigation into Jerusalem. Jerome Powell and the Pentagon is moving more troops and ships to the Middle East. It's Friday, March 13th. I'm Alex Osulla for the Wall Street Journal. This is the PM edition of what's News, the top headlines and business stories that move the world today. Two data points are out today from the Commerce Department on the US Economy. GDP for the end of last year was Revised down to 0.7% growth, well short of the 1.4% pace initially reported. And the Personal Consumption Expenditures Price Index, the Fed's preferred measure for inflation, was 2.8% in January. That's a slight decline from December, but still above the central bank's target. And those numbers are, of course, before the Iran war, which has raised energy prices. WSJ economics reporter Matt Grossman says that because of the war, this inflation data isn't as helpful to economists and policymakers.

[Matt Grossman]

As everyone who's driven in the last couple of weeks knows, gas prices are already a lot higher. So so I think this report best serves as a baseline for where things stood before the war. Things were already a bit hotter than the Fed wanted in January, and economists are on the edge of their seat to see how much of an increase we get once we get the March data.

[Alex Osulla]

Matt says the war may affect the Fed's thinking.

[Matt Grossman]

The Fed in January felt their policy was in a decent place to watch inflation gradually fall back to that 2% level over the course of the year, and maybe they could find opportunities for a cut or two. Of course, that was before we knew this war in Iran was coming. The fear would be that not only does that translate into higher gas prices, but higher prices for everything else too, because so much of what we buy has to get shipped. So at the margin. Traders have seen the war news as being more on the pessimistic side for actually getting those rate cuts this year.

[Alex Osulla]

FOREIGN. The continuing war in the Middle east and worries about its economic repercussions weighed on stocks today and pushed up oil prices. Brent crude, the global oil benchmark, rose 2.7% to more than $103 a barrel. Since the attacks between the U.S. and Iran started nearly two weeks ago, Brent prices have surged more than 40%. The Nasdaq led the day's losses in the U.S. stock indexes, falling 0.9%. All three indexes finished lower for the week, with the Dow posting the steepest losses. It ended down 0.2%. Private credit has in recent years powered massive growth on Wall Street. Now though, that engine has been sputtering. Investors are trying to pull money out of big funds, endangering firms future profits. PRIVATE for more on what's driving the run on private credit, I'm joined now by Matt Wirtz, who covers credit for the Journal. Matt to remind people, private credit is loans made by private fund managers to corporations, financial institutions and sometimes even consumers that were traditionally made by banks. So why this rush of redemptions? Why is this happening and why now?

[Matt Wirtz]

Well, on Wall street they love to say like what inning are we in? And I think this is a reflection of broader investor angst. There's a sense that valuations are quite high, that maybe we're in like the seventh or the eighth inning of this boom in both credit markets and also in equity markets. What makes private credit different is that it's mostly sold to individual investors through these funds that, unlike mutual funds, limit the speed at which you can withdraw your investment. And that's because the assets in the funds are these private loans that are actually kind of hard to sell. So it's a structure that makes sense. However, when these products were sold, from what I've heard talking to numerous financial advisors, brokers, some investors were very aware that these funds that they were buying would limit the speed at which they could take out their money. And then some people, they weren't, they were just told, hey, you can get 11% yield on this and it's holding really safe senior secured loans and it's the top notch asset manager. And that's why we're seeing, I think, the pandemonium that we're seeing right now.

[Alex Osulla]

Was there a particular catalyst for this or people just sort of woke up one morning and they're like, oh, what's happening to my money?

[Matt Wirtz]

You know, I've been hearing a lot about behavioral economics. When I talk to the fund managers and the regulators, this seems to be a lot about investor psychology. There's this belief I need to get out before everyone else gets out. And the catalyst for this was oddly, that these like strange little frauds that happened in the credit market, but not just in the private credit market, but there were these companies like First Brands and Tree Color. Those events started to trigger this spidey sense for some investors. Redemption started to go up. And then all of a sudden investors, at least some of them woke up to the fact that, oh, wait, I might not be able to get all my money out when I want it. I better put in for it now. And then it just kind of built and built. Most of the analysts that I spoke to think that the next quarter, 2Q26 is going to be worse than the first and then that will likely be the peak. This is a very new industry and it's going through growing pains. There had been this big push last year to start including these kinds of investments in 401s, for example. And this, what we're seeing now, shows the dangers of doing that without having the right structure and the right education in place.

[Alex Osulla]

That was WSJ reporter Matt Wirtz. Thanks, Matt.

[Matt Wirtz]

All right, thanks, Alex.

[Alex Osulla]

Coming up, the latest on Iran and the Justice Department's investigation into the Fed. Plus, how prediction platforms are supercharging Oscar spends. That's after the break. On December 12, Disney invites you to go behind the scenes with Taylor Swift exclusive six episode docu series. I wanted to give something to the fans that they didn't expect. The only thing left is to close the book the end of an era and don't miss Taylor Swift. The Eras Tour, the final show featuring for the first time the tortured poets department, streaming December 12th only on Disney Plus. The Pentagon is moving more Marines and warships to the Middle east as Iran steps up its attacks on the Strait of Hormuz, three US Officials said that Defense Secretary Pete Hexev has approved sending units that typically consist of several warships and 5,000 marines and sailors. In an interview with Fox News Radio that aired today, host Brian Kilmeade asked President Trump how he'll know when the conflict is over.

[Matt Wirtz]

When I feel it, okay? Feel it in my bones.

[Alex Osulla]

As for the refueling aircraft crash that we told you about this morning, all six crew members who were aboard the plane have now died. The US military says 13 service members have been killed in action during the Iran conflict. The US and its European allies are diverging on Russia. Europe sees Russia as a greater threat than Iran. German Chancellor Friedrich Merz became the latest European leader to criticize the Trump administration today. He said the US Decision to temporarily lift Russian sanctions to ease pressure on oil prices was a bad one.

[John Jurgensen]

As you all know, we had a video conference with the G7 leaders on Wednesday, and six out of seven were clearly the opinion that we should not release the sanctions against Russia. And we were a little bit surprised that we heard this morning that the American government decided differently.

[Alex Osulla]

The Iran war has helped increase Russian energy revenues thanks to the surge in oil prices. Treasury Secretary Scott Besant said the sanctions relief is designed to increase the global reach of the existing supply of oil. And a federal judge ruled today that a pair of subpoenas the Justice Department issued to the Federal Reserve were improper, a big blow to the government's investigation. U.S. attorney Jeanine Pirro opened the criminal investigation into Fed Chair Jerome Powell to examine whether Powell gave false testimony to Congress last summer. The judge, an Obama appointee, wrote in his decision that the purpose of the subpoenas was, quote, to harass and pressure Powell either to yield to the president or to resign. Pirro said she would appeal. And finally, the Oscars are this weekend. There's long been a tradition of betting on the winners at house parties or in office pools. Now that's getting turbocharged on prediction market platforms like Kalshi and Polymarket, and people are putting serious money behind it. Between Kalshi and Polymarket, volume on Oscars bets has topped $100 million and growing. I'm joined now by WSJ entertainment reporter John Jurgensen. John, what are the kinds of things that people are betting on on these platforms?

[John Jurgensen]

Well, think of the fact that there are 24 official Oscar categories. So they're betting on all of those categories, but then there's all kinds of extra stuff, including what people might say, who might show up, et cetera, et cetera. Pretty much anything you can imagine that might be at the Oscars, people are betting on it.

[Alex Osulla]

In terms of individual bets, did it sound like people were really putting a lot of money behind this or is just kind of like a hobby thing to do?

[John Jurgensen]

Well, most people that I spoke to who are really just dabbling in the prediction markets for the first time are putting down the kind of wagers that you would see at your annual Oscar parties. Five bucks, ten bucks, twenty bucks. Here and there not huge risks, but they're hoping for some upside if, like upsets happen in the race itself.

[Alex Osulla]

Who are bettors banking on for best picture, which I assume is one of the biggest categories.

[John Jurgensen]

It is in terms of trading volume, that is definitely the biggest category. So, yeah, the trading and betting is really circulating around the two front runners, Sinners and One Battle after Another.

[Alex Osulla]

And what about you? Where is your theoretical money going on the Best Picture race?

[John Jurgensen]

I do think it's gonna be one battle. Paul Thomas Anderson's a really respected filmmaker and people think it's kind of like quote, unquote, his time. But Sinners has made a really strong showing and it really could pull someone out.

[Alex Osulla]

That was WSJ entertainment reporter John Jurgensen. Thanks, John.

[John Jurgensen]

You're welcome.

[Alex Osulla]

And that's what's news for this week. Tomorrow you can look out for our weekly markets wrap up what's News in Markets? Then on Sunday, we'll be discussing how American women are doing professionally and economically. That's in what's New Sunday. And we'll be back with our regular show on Monday morning. Today's show was produced by Pierre Biennime with supervising producer Tali Arbel. Michael Lavalle wrote our theme music. Aisha El Musleam is our development producer. Chris Sinsley is our deputy editor. And Falana Patterson is the Wall Street Journal's head of news audio.

[John Jurgensen]

Alex.

[Alex Osulla]

I'm Alex Osola. Have a great weekend and thanks for listening. Hey, this is Telus Demos and I'm Miriam Gottfried. We're reporters at the Wall Street Journal and The hosts of WSJ's take on the Week. It's a weekly show that gives listeners a leg up in the world of markets and investing.

[Matt Wirtz]

From the Fed's moves to market bubbles,

[Alex Osulla]

we dive into the biggest deals, key players and business news ahead. If you're looking for more tools that you can use to help navigate the markets, consider becoming a subscriber to the Wall street journal. Visit subscribe.WSJ.com takeontheweek to subscribe now.