The cockroach metaphor is older than the present author — when Warren Buffett used it in a 1989 letter to Berkshire Hathaway shareholders, it was already a cliché. But in 2025, this stale phrase got a refresh thanks to JP Morgan boss Jamie Dimon.

Dimon was discussing JP Morgan’s losses related to Tricolor Holdings, a Dallas-based subprime auto lender which JPM had warehoused, but it caught the market’s imagination again, and suddenly cockroach chat was everywhere.

Were asset-backed markets, particularly private facilities, infested? Were the cockroaches just bad apples? How many times can you say “idiosyncratic” before it looks like a cop-out? And what does it mean for the future of ABF and private credit?

2025 has seen several fresh cockroaches, and some older situations come to light.

Few lawyers or bankers involved in these situations were willing to discuss them on-the-record, citing the sensitivity of the topic, but the following represents a compilation of multiple private and background discussions with market participants over several months.

The cockroaches have placed the assumptions underpinning asset-backed markets under uncomfortable scrutiny; what if the systems meant to monitor collateral don’t work?

“Deal structures are fundamentally keyed off the source of data, which is the servicer,” said a lawyer involved in some of the cockroach cases. “If the servicer is not providing accurate raw data, then the entire source code is flawed. Everything is built around the belief that what’s disclosed in the servicing report is accurate.”