David Solomon

You can't separate the fact that we've been in a very, very long, easy credit cycle, one of the longest I've seen in my career, without a real credit pullback, without an economic environment that's really put an enormous amount of pressure on credit.

And in that context, credit spreads are historically tight.

And I know at some point there will be a credit cycle.

It will probably come at a period of time when the economy slows more acutely or there's some sort of a macro event that changes confidence we have in growth and the trajectory of the economy.

And when that happens, given the loss of lending activity, there will be losses in credit and those losses will be felt across the system.

But that's different than a systemic crisis.

you know, a systemic crisis.

And I don't see anything in the context of a handful of bad credit situations that's leading me to say that we have a systemic issue around the corner.

Unfortunately, you know, lenders make mistakes.

There is fraud in markets.

And, you know, that's something that as lenders we all have to try to protect against.

But we should not be fooled by the fact that this is a very robust credit environment.

Credit spreads are tight.

And when we do have a cycle, which probably will come when there's an economic slowdown, there will be losses and we'll feel that across the economy.

I don't think about, when I think about lending, I don't think about, you know, easy money.

You know, lending is an activity, whether it's private credit or it's banks lending activity, lending is a through the cycle activity.

There's no question when spreads are tight,

you actually earn lower relative returns.

But the real alpha for credit market participants comes in the tough cycles when you have to restructure credits, you have to have more conviction to enter credits because you can earn higher returns.

And so the real alpha in long cycle credit investing comes from being able to manage not just at times when credit is