An Auto Parts Company Collapse Brings Back Nightmares from the Past

Oct 27, 2025

At the end of September, U.S. auto parts conglomerate First Brands declared bankruptcy. First Brands makes replacement components including filters, brakes and lighting systems for the automotive aftermarket.

The collapse of a medium sized company rocked the world of finance, well beyond the size of the company. JPMorgan’s Jamie Dimon suggested parallels between bad lending in the private credit market and the bad subprime lending that brought on the 2008 crisis. To quote Dimon: “I probably shouldn’t say this, but when you see one cockroach, there are probably more.”

Over the last decade, First Brands, a relatively small company, had gone on a 12-billion-dollar borrowing spree, buying up well-known brands that include Raybestos brake solutions, TRICO wiper blades, FRAM filtration products and AutoLite sparkplugs. Its products fill the shelves of AutoZone, NAPA, O’Reilly, Walmart and Amazon.

At its height, the company had sales of about five billion dollars a year, that is, a fraction of the amount of debt it had taken on. But it was able to attract some of the biggest names in banking to help finance not only its takeovers, but also its day-to-day operations.

First Brands’ borrowing binge was not unusual. It was part of a two-trillion-dollar boom in corporate lending in private credit markets, that is, subprime loans for corporations. These loans come with high interest rates and fees, and therefore are extremely profitable. But they are also very risky and opaque.

The companies making the loans had no idea of the full extent of First Brands’ load of debt … nor did they much care, because they didn’t keep hold of the loans themselves. Instead, they bundled the loans from First Brands with other corporate loans and turned them into new securities, which they called collateralized loan obligations. They then sold these securities to pension funds, endowments and private investors, claiming that these securities were extremely safe and secure, making big profits along the way.

This summer, First Brands’ house of cards, based on debt upon debt, fell apart. Trump’s new tariff policy put a crimp in First Brands’ business, while greatly increasing its expenses. In danger of running out of money, the company tried to get much more financing. But this time, lenders began to ask questions, and the money spigot was turned off. Without more financing, First Brands quickly ran out of cash and collapsed, causing enormous losses from Zurich to Tokyo.

So far, however, this has not led to a bigger financial collapse, as many Wall Street insiders, like Jamie Dimon, feared. But nobody knows when another bankruptcy might lead to a new catastrophe.

All those Wall Street companies, financiers, politicians and regulators, who swore after the financial collapse of 2008 that they had learned their lesson, that they would never do the same thing—they all lied. Their drive for ever more profit and wealth has put in place not only a repeat of the last big financial collapse—but the possibility of something far, far worse.