The CEO of a firm overseeing over $1 trillion in assets reveals the two risks that could bring the global financial system to its knees.
In an interview with The Pulse, Brookfield chief executive Bruce Flatt says recent stress in the $1.8 trillion private credit market does not pose a systemic threat to the global economy.
“Private credit is very small and software loans are even smaller. And in a global situation, the credit markets are very, very large, and this is not a systemic issue.”
Flatt adds that only two areas have the capacity to destabilize the global financial system at scale.
“There’s only really two things that can bring the world down from a systemic basis, and that’s bank balance sheets, and they’re in excellent shape, and real estate loans, and housing in the world, and it’s in excellent shape. And the consumers, the consumer is still able to pay all their mortgages.
So neither of those are systemic issues, and so I think we just have to step back and think about it in perspective.”
The latest data from the New York Fed shows aggregate delinquency rates ticked higher in the fourth quarter of 2025. As of the end of December, 4.8% of outstanding household debt was in some stage of delinquency, up 0.3 percentage points from the prior quarter.
Early-stage delinquencies rose slightly for mortgages and more notably for student loans, while autos, credit cards and home equity lines remained mostly steady. About 124,000 consumers had a bankruptcy notation added to their credit reports in the quarter, down from 141,000 in the previous period. The share of consumers with third-party collection accounts declined to 4.6% from 4.9%.
The figures suggest modest deterioration in consumer credit metrics, but not the kind of systemic stress Flatt says would be required to “bring the world down.” Historically, systemic crises have emerged when bank capital or housing collateral values deteriorate sharply, conditions Flatt says are not present today.
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