Senator Warren Takes Aim: S&P Global, Moody’s, and Fitch Ratings Hit With Demand Letters

Wall Street's credit scorekeepers are in the hot seat again—this time, courtesy of Senator Elizabeth Warren.

The Massachusetts Democrat fired off demand letters to the big three ratings agencies, pressing for answers on their evaluation methodologies. No specifics disclosed yet, but the timing suggests this could be another salvo in Warren's long-running campaign for financial transparency.

While the agencies maintain their independence, critics argue their paid-by-issuer model creates inherent conflicts—after all, you don't bite the hand that feeds you AAA ratings.

One thing's certain: When Warren takes aim, markets listen. Whether this leads to meaningful reform or just another round of corporate reassurances remains to be seen.

Warren reaches out to the Treasury Secretary

The TRUMP administration will likely give the industry more fuel by making it easier for regular people to invest in it. For example, an executive order may help make private assets more accessible to 401(k) retirement plans.

Warren also wrote a different letter on Thursday asking Treasury Secretary Scott Bessent to look into the size of the private credit market and how it could affect the financial stability of the US economy. 

Sen. Warren is pressing for clarity on the private credit market.

Asking Treasury Sec. Bessent to assess its size and stability risks, while also requesting S&P, Moody’s, and Fitch explain how they rate private-credit product risk. pic.twitter.com/8VM3AXERaF

— StockStorm (@StockStormX) July 17, 2025

She said a government assessment from last year talked about the possible vulnerabilities in the private-credit market, such as its lack of transparency and developing ties to banks and other institutions.

JPMorgan says  private-credit is risky

The private-credit market is growing quickly, which is hurting banks’ more regulated lending businesses.  The amount of money obtained to lend to private-equity-backed enterprises. It makes up the largest market component, and has gone up more than 100 times since 2006, reaching about $700 billion in 2024. 

JPMorgan and some of its competitors have lost revenue as their new, unregulated competitors have grown. Jamie Dimon, the CEO of JPMorgan Chase, has said that the private-credit market is similar to the mortgage market before the 2008 financial crisis. 

“Parts of direct lending are good,” Dimon said at the event. “But not everyone does a great job, and that’s what causes problems with financial products.”

So far,  Dimon has dedicated $50 billion in the investment bank’s capital towards providing debt financing for clients doing acquisitions and other deals, effectively starting a private credit operation inside JPMorgan.

In addition, some investors have voiced concerns about how private-credit products are rated, observing that the firms that package loans to back securities like collateralized debt obligations can choose their rating provider. 

However, according to Paul Atkins, SEC chairman, Private funds have grown dramatically in the last decade to $30.8 trillion from $11.6 trillion. “Allowing this option could increase investment opportunities for retail investors seeking to diversify their investment allocation in line with their investment time horizon and risk tolerance,” he said at the conference in Washington.

A new strategy of extending credit originated independently

The Big Guys in the private credit industry, like Apollo, Ares, and KKR, are using a very unique strategy. They give out credit that they create themselves. It is frequently backed by high-earning assets like rail carriages and data centers, which keep debtors locked in for many years. 

In exchange for tying up that money for nearly a decade, the borrowers are willing to pay a lot more in interest than if they had to get the money from a network bank. This is because of the long, expensive syndication process that required securing ratings from S&P and Fitch, facing tough covenants, and oftentimes enduring long waits for the funding.

Also, those loans, based on their credit quality, are the equivalent of investment grade bonds, because of the “illiquidity premium,” they merit higher rates. 

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