The fall of Tricolor Holdings, a subprime auto lender that once promised to bring affordable cars to working-class families, wasn’t just another bad headline buried in the business section. It was the latest crack in a structure that is starting to split wide open. A few weeks later, the news broke that First Brands, a major auto parts supplier carrying mountains of hidden debt, was on the edge of collapse. Some say these are isolated failures, unlucky firms that stretched themselves too far. But anyone who has followed the American auto sector knows better. These collapses are signals of a deeper sickness spreading through our industrial heartland. They show us that the very industry that helped build the American middle class is being strangled not by foreign competition or a lack of innovation, but by debt—layers upon layers of it, stacked like rotten wood waiting to splinter.
For generations, the auto industry has been more than an economic sector. It has been a backbone of America. Detroit wasn’t just Motor City—it was the embodiment of our national pride, a place where everyday men and women could earn an honest living, provide for their families, and retire with dignity. The cars that rolled off those assembly lines weren’t just vehicles; they were symbols of American ingenuity and resilience. During World War II, those same plants turned out tanks, planes, and engines that helped secure victory. The auto industry has always been tied to the strength of the nation. Yet today, that legacy is being hollowed out by a financial game that rewards debt over durability and paper profits over real progress.
First Brands looked like a success story on the surface. It grew rapidly, snapping up smaller companies, expanding its product lines, and presenting itself as a modern auto parts powerhouse. But dig into the numbers and you find a different story. The growth wasn’t built on stronger production or groundbreaking technology. It was built on borrowing. Billions in loans, much of it hidden in the shadows of private credit markets, kept the lights on. Off-balance-sheet gimmicks like reverse factoring helped disguise the true scale of its obligations. Reverse factoring might sound like an accountant’s footnote, but in reality it’s a sleight of hand. Instead of paying suppliers directly, the company uses a financial middleman. The books make it look like trade payables instead of debt. The truth? It’s a shell game that lets executives pretend their company is healthier than it really is. Imagine putting your mortgage on a credit card and then bragging to your neighbors about how debt-free you are. That’s the game being played.
And First Brands is far from alone. Across the auto industry, companies have leaned on private equity cash, leveraged buyouts, and shadow lending. Private credit funds—largely unregulated cousins of banks—are now some of the biggest lenders in the sector. Their deals are less transparent, more aggressive, and often structured to benefit financiers first and companies second. Wall Street calls it innovation. Workers call it instability.
The ripple effects reach further than many realize. Consumers are already feeling the pinch. Tricolor specialized in subprime lending, offering high-interest auto loans to working-class families who didn’t have many options. On paper, it gave people access to cars they needed for work and family life. In practice, it saddled them with crushing debt. When the economy tightened, defaults rose, and the lender collapsed. Families lost their vehicles, their credit scores, and sometimes even their jobs when they couldn’t get to work. Workers on the supply side are hit just as hard. When a supplier like First Brands buckles, it’s not just shareholders who feel it. It’s factory workers facing layoffs, small towns watching their tax base evaporate, and families losing the security of steady paychecks.
This cycle is not new. In 2008, America watched two of its Big Three automakers—General Motors and Chrysler—go bankrupt. Delphi, once a titan among suppliers, collapsed under the weight of debt. Thousands of jobs were lost, pensions were gutted, and taxpayers were called on to clean up the mess. Hertz, though not an automaker, followed the same path in 2020. It grew fat on borrowed money and collapsed when demand dipped. Each of these cases was framed as a one-off, but together they form a pattern. America’s auto industry keeps driving into the same ditch because the business model hasn’t changed. Borrow big, disguise the risk, hope nothing goes wrong, and when it does—hand the bill to workers and taxpayers.
Debt has become the engine of the industry. Instead of measuring success by how many cars roll off the line, how safe they are, or how well they sell, Wall Street measures it by how much leverage a company can sustain. The people at the top get rewarded for squeezing value out of balance sheets, not for putting better vehicles on the road. Innovation takes a back seat to financial engineering. And when interest rates climb or consumer demand dips, the house of cards tumbles.
There’s another dimension to this crisis: national security. America’s auto industry has always been more than a business—it’s been part of our arsenal of democracy. In times of war, those factories became weapons plants. In times of peace, they drove the growth of our middle class. If we let debt-driven collapses hollow out the sector, we risk more than just jobs. We risk losing the ability to control our own industrial future. Every time a supplier goes under, we become more dependent on foreign parts and less capable of scaling production when the nation needs it. That’s not just bad economics. It’s dangerous.
So what’s the path forward? First, transparency. Companies should not be allowed to hide their true debt levels behind accounting tricks. Reverse factoring, private credit deals, and off-balance-sheet liabilities must be disclosed plainly, not buried in footnotes. If a company is carrying $10 billion in obligations, the public should know it.
Second, accountability. If banks have to undergo stress tests to prove they can withstand economic shocks, why shouldn’t private credit funds? These firms are pumping billions into America’s industrial backbone without the same oversight as banks. That’s a recipe for systemic collapse. Regulators can no longer pretend private credit is a side show. It’s center stage, and it needs to be treated as such.
Third, we must rethink what we reward. Wall Street cheers when companies take on debt to buy back stock or pay dividends. Those moves enrich investors in the short run, but they leave companies weaker. Instead of celebrating financial sleight of hand, we should be lifting up firms that invest in workers, in innovation, and in long-term stability.
Fourth, we need to stand with workers. Time and again, it’s the people on the assembly line who pay the price for executive greed. They lose jobs, pensions, and healthcare while those at the top float away on golden parachutes. Workers deserve a seat at the table. They are the backbone of the industry. Protecting their livelihoods isn’t just fair—it’s patriotic.
America cannot afford to let its auto industry turn into a debt trap. This sector built the middle class, defended the nation in war, and gave generations of Americans the chance to live out the promise of prosperity. To allow it to be hollowed out by Wall Street gamblers is nothing short of betrayal. We need leaders willing to stand up, demand accountability, and put American workers and families first.
The collapse of Tricolor and the looming fall of First Brands aren’t isolated accidents. They are signs of a road we’ve been driving down for too long. If we don’t change course, more firms will fall, more jobs will vanish, and America’s industrial backbone will fracture further. But if we confront the truth, demand transparency, and put people above debt, we can restore the strength of an industry that has always been central to our national story. The choice is ours: keep driving on borrowed time, or rebuild the road to real prosperity.
Disclaimer: This article reflects the opinion and analysis of the Craig Bushon Show Media Team. It is intended for educational and commentary purposes only. While based on publicly available information, readers should conduct their own research before drawing conclusions.
