“…The trouble with private credit companies, Krugman says, is where said companies get their money from. Though the collapse of private credit alone would not be enough to cause a crash, compounded with other economic issues, it could be enough to trigger a crash, the veteran economist suggested.
“…private credit companies have in fact borrowed large sums from banks, mostly in the form of revolving credit lines,” he wrote. “This means that banks might suffer losses if private credit companies fail…”