If you see one cockroach, there are probably more. That's the old saying on Wall Street, and it's suddenly very relevant to the $1.7 trillion private credit market.

Two of the biggest names in banking just flashed warning signs that should make anyone with a pension or 401(k) pay attention. JPMorgan Chase announced Wednesday it's pulling back on lending to private credit firms and marking down software loans, while Morgan Stanley limited redemptions on one of its private credit funds. Translation: the money that was supposed to be "alternative" and "uncorrelated" to public markets is starting to look a lot like regular debt during a downturn.

Here's what actually happened. JPMorgan, which has been one of the biggest lenders to private credit firms, is now saying "slow down." They're writing down the value of loans they made to software companies—companies that private credit funds also lent to heavily. Meanwhile, Morgan Stanley told investors in one of its private credit funds that they can't have all their money back right now. They're "limiting redemptions," which is finance-speak for "you can't leave."

This matters because private credit has become huge. It's not just hedge funds anymore. Your pension fund probably has money in this stuff. University endowments are in it. The pitch was simple: higher returns than bonds, less volatility than stocks, and professional management. What they didn't emphasize: you can't sell this stuff when things go bad, and nobody really knows what it's worth until someone tries to sell it.

Jamie Dimon, JPMorgan's CEO, has been warning about private credit risk for over a year. Turns out he wasn't just talking his book. When rates were zero, everyone with money was desperate for yield and private credit delivered. But now that the Fed funds rate is over 5%, regular corporate bonds look pretty good again. Why tie up your money for years in an illiquid loan when you can get 6% on a bond you can sell tomorrow?

The real worry is what happens next. Private credit loans get repriced quarterly or annually, not daily like stocks. That means the pain shows up slowly, then all at once. If more funds start limiting redemptions, it could freeze up a market that was supposed to be the new normal for corporate lending.

What should you do? If you have money in a pension or endowment, you probably can't do much directly—they make these decisions for you. But you can ask questions. How much private credit exposure do they have? What's the liquidity situation? Are they still adding to these positions?

If you're investing on your own, this is a reminder that "alternative investments" aren't magic. They have risks, and one of the biggest is that you can't always get your money back when you want it. That's not necessarily bad, but you better be getting paid enough to make that worthwhile.

The irony here is that private credit was supposed to fill the gap when banks pulled back from lending after 2008. Now the banks are pulling back from private credit. Maybe the gap was there for a reason.