Goldman Sachs executive: AI may complicate lending decisions

Goldman Sachs executive says AI will challenge lending decisions in the coming years.

Mahesh Saireddy, co-head of Goldman Sachs Capital Solutions Group, told the Bloomberg Invest conference in New York that uncertainty over AI will make underwriting harder over the next six to 24 months.

He said risk concerns have spread from equity markets into credit markets, and the capital-raising process for companies in that sector.

Reuters reported that software stocks have been selling off for months, along with shares of asset managers that bought those stocks and lent to those companies.

Saireddy added that disruption will affect sectors beyond software and that lenders will face unknowns for six to 24 months.

Reuters said these remarks reflect challenges lenders face as firms and markets adapt to AI-driven change.

🔗 Source: Reuters

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Implications, context, and why it matters.

Risk warnings track near-term underwriting uncertainty amid a broader credit pullback

Mahesh Saireddy warned of “risk concerns,” and lenders now treat AI disruption as a near-term underwriting problem over the next six to 24 months.
Those worries drove the U.S. leveraged loan market’s steepest monthly drop in more than three years in February, with prices down 1.34% 1.
Some software companies have delayed debt fundraising as lenders dig deeper and borrowing costs rise 2.
UBS estimates AI disruption could add $75 billion to $120 billion in new defaults across leveraged loans and private credit by late 2026 under its baseline scenario 3.

Lenders face two AI problems in credit decisions

Saireddy flagged the challenge of underwriting companies exposed to AI, while lenders also weigh how they use AI in lending.
Regulators keep pressing for explainability, which raises the risk of relying on opaque “black box” models without clear reasons for adverse credit decisions 4.
Financial institutions using AI in lending must prove models can be explained, tested for fairness, and governed with clear controls plus documentation 4.
Goldman Sachs faced regulatory scrutiny tied to Apple Card, and the Consumer Financial Protection Bureau (CFPB) later fined Apple and Goldman Sachs over separate Apple Card failures in 2024, according to the cited summary 4.