A new Moody’s Analytics report warns that private credit could be a “locus of contagion” in a downturn. The concerns echo past criticisms of the booming industry from JPMorgan CEO Jamie Dimon. The report raised concerns about what it called the industry’s growing “interconnections” across industries from banking to insurance. “The same institutional investors, say an insurance company or a sovereign wealth fund, might hold stakes in private credit funds, CLOs, and public corporate bonds,” the report said, adding:”If losses occur in one investment, that investor may be forced to liquidate assets elsewhere, propagating stress.” Dimon said that there “could be hell to pay” if the private credit sector falters, saying it reminds him a “little bit” of the mortgage industry. Private credit investors, like Apollo CEO Marc Rowan, have argued that the new model is actually making the financial system safer. “Jamie is an amazing representative of the banking industry,” “But every dollar that moves out of the banking industry and into the investment marketplace makes the system safer and more resilient and less levered.” The private credit industry is still much smaller than banking, and does “not yet appear to be systemically important,” the report said, adding that “it could disproportionately amplify a future crisis.” The report listed regulatory recommendations that could soften the potential impact of a private-credit crisis, such as increased stress-testing of large funds, transparency and data reporting, and limits or guidelines on leverage at certain funds. In other words: Make private credit funds a bit more like banks. “The objective is not to stifle the beneficial innovation that private credit provides but to shine a light on its risks and linkages so that a rapidly growing part of corporate finance, and potentially other sectors, does not become a blind spot,” the report said.