Three major crises. Three lessons in where credit risk hides.
The Global Financial Crisis, COVID, and the recent regional bank failures each taught Fortress something different about how credit markets evolve under stress, and where the real risks hide.
The GFC showed how stress in residential home loans cascaded into seemingly unrelated sectors through connections many market participants were unprepared for. COVID tested operational resilience overnight, as entire industries shut down.
Jack Neumark, Co-CEO and Managing Partner at Fortress, explains that lessons from each cycle have become embedded in Fortress’s processes and underwriting.
Watch to explore what each of these cycles revealed about credit risk.
Jack Neumark:
We've been through several major market cycles at Fortress: the global financial crisis, COVID, and the recent regional bank failures. Each one has taught us something different about how credit markets evolve under stress, and where the real risks hide. During the global financial crisis, we saw the rapid
waterfall of risks across the financial system in ways never before understood. The extent and the depth of the connections across the financial system had created new risk for which many market participants were unprepared. For example, we saw how stress in residential home loans cascaded rapidly into seemingly completely unrelated sectors.
The COVID-19 pandemic tested operational resilience in ways we'd never seen. Overnight, entire industries shut down. Workplaces were shuttered. Businesses and financial markets needed to adapt constantly to survive. Because we lived through the GFC, we had experience in adapting quickly. We had the frameworks, the team experience, and most importantly the borrower relationships to work through problems collaboratively.
While banks were pulling back from lending, we were able to step in with a range of established investing strategies geared to the opportunity set.
We learn from every market cycle and build those lessons into our platform. Our underwriting today reflects 25 years of experience.
Experience matters most when markets are stress-testing everyone's assumptions. That experience isn't just in our models, it's in our people, our processes, and our culture.
