In a new article for Dollars and Sense, Lenore Palladino (economics and public policy) discusses how the Trump administration's decision to remove barriers for 401(k) holders to private credit markets is an explicit effort to redirect retirement funds to the "least regulated, most opaque corner of American finance." In the piece, Palladino lays out how the structure of private credit markets leads to particularly acute dangers for 401(k) holders, including information opacity, cash conversion, and the capacity for companies to keep themselves away from public scrutiny. Palladino warns that risk is now transferred to the individual, stating that, "If private credit funds sustain significant losses—and the Swiss bank UBS has projected that under aggressive AI disruption scenarios, default rates could rise substantially—retirement savers, not fund managers, will bear the cost."
Lenore Palladino: 401(k)s and private credit set up retirees for significant loss
