After Tricolor collapse another indebted US auto-connected firm goes under

Nick Beams

When the Texas-based subprime auto lender Tricolor Holdings filed for bankruptcy earlier this month, the Wall Street Journal posed the question as to whether it could be “a canary in a subprime debt mine.”

New automobiles parked at the Port Newark Container Terminal in Newark, N.J., on March 27, 2025. [AP Photo/Ted Shaffrey]

This week it was revealed that the US auto company, First Brands, involved in the manufacture of parts and highly dependent on debt, is facing bankruptcy with its creditors involved to the tune of billions of dollars.

They include the private credit firm Jeffries and the Chicago-based UBS O’Connor.

A report in the Financial Times on Tuesday noted: “The speed with which First Brands’ finances have deteriorated has shocked debt investors, who were already unnerved by the sudden collapse into bankruptcy of US subprime car lender Tricolor Holdings.”

The FT said the company had “borrowed nearly $6 billion in private loans and has billions more in financing linked to its customer and supplier invoices, much of which is not reflected in its official debt figures.”

The total figure for the company’s debt may be as much as $10 billion.

Problems first emerged last month when First Brands reported that it had stopped a planned refinancing operation because investors had raised concerns about its financial reporting, with one person involved telling the FT that attempts to revive it were “dead.”

First Brands used a method known as factoring, in which a company sells outstanding customer invoices to banks and investors to raise cash. It was also involved in a technique called reverse factoring, in which an investor pays the company’s suppliers and then collects the money from it later.

Such operations are generally not included in the company’s published accounts and are considered to be “off balance sheet.”

The Ohio-based First Brands is a privately owned firm and is involved in the selling of auto parts including windscreen wipers, water filters and fuel pumps. Over the past five years it has grown rapidly through what the rating agency Moody’s called earlier this year “an aggressive financial policy of pursuing fully debt financed acquisitions” of other companies.

It is not as yet entirely clear how and why the financial problems have emerged so rapidly but the pressure on the auto and auto parts industry flowing from the Trump tariff hikes and the decline in spending by less well-off sections of the population are no doubt factors.

The two auto industry bankruptcies within the space of a month have drawn attention to the role of private equity firms in providing finance for mid-sized and highly leveraged companies which are unable to obtain funding for riskier ventures from the banks. The private equity firms are drawn into such financing because of the higher rate of return it brings.

A single collapse may have been able to be dismissed as a one-off event but two in the space of just two weeks points to deepening problems in the credit market.

Major banks, including JP Morgan Chase and Fifth Third, have been caught up in the collapse of Tricolor and are set to lose hundreds of millions of dollars. One investor in Tricolor said the collapse of the company was one of the “worst things I’ve ever seen” in the asset-backed securities market.

In a comment to the FT, another raised the question of how JPMorgan had missed the potential problems at Tricolor.

“That’s the shocking part of it. JP Morgan is one of the most sophisticated lenders in the entire world. How the hell could they have missed this?”

Moreover, the problems in private credit have been developing in plain sight.

Earlier this year a report on the private credit system carried out by Moody’s in collaboration with the Securities and Exchange Commission and a former top adviser to the Treasury warned that it was so intertwined with the banking systems that it could be a “locus of contagion” in a future financial crisis.

This is because while the banks have been constrained by tighter regulations in the wake of the 2008 crisis, they lend money to hedge funds and other private credit providers which then provide the finance for riskier ventures.

The report found that private credit funds were enmeshed with the banks and this created linkages that introduced “modes of systemic stress.”

The opaqueness of the private credit system and their role in making the financial network “more densely interconnected mean they could disproportionately amplify a future crisis.”

The official position of financial authorities is that the regulations introduced after 2008 have made the banks more secure and guard against a repetition of those events. But this could very much be the case of generals fighting the last war because the financial landscape has changed markedly over the past decade and a half with private credit playing a much greater role in lending.

“Today’s network of interconnections in the financial system is more distributed, with a denser web of connections than it had pre-crisis, when the system operated more a like a ‘hub and spoke’ model with banks at the centre of the network,” the report said.

It found that banks are “increasingly involved private credit and other non-bank financial institutions through partnerships, fund financing and structured risk transfers that allow them to maintain economic exposure to credit markets while shifting assets off balance sheet.”

In another report issued in May, economists at the Boston branch of the Federal Reserve came to the same conclusions about increased risk. They said that the banks were exposed to a new channel of risks by providing finance to non-bank organisations that were making loans to companies.

“Banks’ extensive links to the private credit market could be a concern because those links indirectly expose banks to the traditionally higher risks associated with private credit loans,” it said.

Rules set in place after the 2008 crisis sought to discourage banks from lending to highly leveraged companies that had difficulties servicing their debts. Banks then started to lend to private credit funds which made the loans.

The rating agency Fitch has reported that loans to non-bank financial institutions, which include private credit funds, had increased to $1.2 trillion at the end of March, a 20 percent increase in a year.

Financial regulators are concerned over this increase because as numerous reports, including from the International Monetary Fund, have made clear, they have little knowledge of, let alone control over, the activities of private credit funds and their connections to the major banks, describing these links as “opaque.”

The tremors in financial markets over the failure of two highly leveraged companies in the space of just a couple of weeks is an indication that the type of turmoil warned of could assume even larger proportions.

Sri Lankan president invokes essential services act against power workers

Wasantha Rupasinghe & W.A. Sunil

Sri Lankan President Anura Kumara Dissanayake imposed essential service orders on state-owned Ceylon Electricity Board (CEB) effective from Sunday midnight to suppress the weeks-long struggle of CEB workers against restructuring and in defence of their jobs and conditions.

CEB workers protesting in front of head office in Colombo on September 17, 2025.

On Tuesday, his Janatha Vimukthi Peramuna/National People’s Power (JVP/NPP) government cancelled leave for all CEB workers until further notice—a move aimed at blocking any sick-note stoppage.

According to Sunday’s gazette notification issued by Dissanayake, all electricity supply services are declared essential. This anti-democratic measure allows the government to ban industrial action by electricity workers.

Non-compliance can lead to a summary magistrate’s trial, with guilty individuals facing two to five years of rigorous imprisonment, a fine between 2,000 rupees and 5,000 rupees, or both. Campaigning for such industrial action is also an offence, punishable by the same penalties.

The Socialist Equality Party (SEP) calls on all sections of the working class to condemn the JVP/NPP government’s repressive measures against CEB workers, and urges everyone to stand in their defence.

Since September 4, some 20,000 CEB workers have been involved in a work-to-rule campaign against restructuring as part of the IMF austerity program. On September 17–18, workers joined a sick-note campaign and held powerful protests outside the CEB head office in Colombo.

Leaders of the Joint Alliance of CEB Trade Unions (JACEBTU), which have called the current limited action, initially boasted that they would not comply with the essential service order. They declared the unions would intensify their campaign if the authorities failed to provide “satisfactory solutions” to their demands.

However, the CEB union bureaucrats did a rapid about-face and bowed down to the government’s orders. Yesterday evening, JACEBTU announced that it had decided to temporarily suspend a scheduled strike for today, citing the offer of a meeting with the government labour commissioner and a meeting with the country representative of the International Labour Organisation. Only the ongoing work-to-rule campaign will continue.

The CEB union leaders only called those limited actions to contain widespread anger among workers over the government’s refusal to protect their rights, including their jobs. The unions, however, have deliberately kept CEB workers isolated and refused to mobilise other workers to defend them against government repression, thus leaving them more vulnerable to the government’s attacks.

Dissanayake’s new moves to suppress the CEB workers’ struggle has the support of the entire political establishment. Yesterday, the parliament approved the president’s essential service order without debate as the leaders of all parliamentary parties had given their approval the previous day.

Last week Power and Energy Minister Kumara Jayakody declared that any CEB worker who did not agree to the restructuring could resign under the voluntary retirement scheme. On September 17, President Dissanayake warned CEB workers that no one would be allowed to obstruct the government’s “progressive economic transformation”—in other words, the IMF’s harsh austerity agenda.

Just one year after coming to power, Dissanayake has declared war on electricity workers. This is a warning to all workers, who are being pushed into struggle by the government’s implementation of the IMF diktats. The president’s invocation of the essential services act is a declaration of war against the working class as a whole.

The JVP/NPP government came to power last year under conditions of deep economic and political crisis by exploiting the immense popular opposition to the traditional parties of bourgeois rule. It put forward a raft of election promises claiming it would renegotiate the terms of the country’s IMF bailout loan, protect democracy and improve the living conditions of the masses. Once in office, Dissanayake quickly tore up his pledges including to renegotiate the IMF’s terms.

As well as state repression, the government is using the unions against CEB employees. On September 22, the JVP-controlled Ceylon Electricity Workers Union (CEWU) distributed a leaflet titled “What will happen to the Electricity Board.” It denounced the struggle of CEB workers as “a conspiracy by defeated, corrupt political groups” and defended CEB’s restructuring as a means to eliminate corruption and fraud.

The CEWU leaflet concealed the fact that the government’s restructuring is fully in line with IMF directives to divide the CEB into four companies, paving the way for their eventual privatisation. Workers’ jobs, salaries and working conditions will be slashed to boost profits.

The SEP urges all workers to oppose the government’s attempt to demonise CEB workers and to see their struggle as inspiration to oppose the relentless attacks on their democratic and social rights. The government is not fighting corruption but carrying out the IMF’s orders, including the decision to raise electricity tariffs further by 7 percent.

There are two main reasons why the Dissanayake government is attacking CEB workers. Firstly, the government is strictly bound by IMF directives and faces being denied the next instalment of the IMF loan if it fails to fully carry them out.

Secondly, Dissanayake fears that if the CEB struggle continues it will encourage other sections of workers to oppose the IMF austerity measures that are devastating living standards.

The JVP trade unions have a history of sabotaging and betraying workers’ struggles including in the CEB. In 1996, for instance, the government of President Chandrika Kumaratunga used the essential services act to crush a strike by CEB workers against privatisation and to rectify salary anomalies.

The JVP trade union leaders declared that the strike would help the opposition UNP, and scabbed. Many of its members, however, joined the strike. Now a similar smear is being used to justify the JVP/government’s repression: that the CEB industrial action is a conspiracy by “old defeated and corrupted politicians”. Just prior to last year’s presidential election, top JVP union leader Lal Lantha insisted that the JVP unions suppress all industrial action as it would hamper the party’s election campaign. Now a minister in the government, Lal Lantha and other JVP leaders branded strikes against the IMF’s austerity as a threat to economic recovery—in reality, a threat to corporate profits and Sri Lankan capitalism.

The decision by the other CEB unions to capitulate to the government’s essential service orders once again demonstrates their treacherous role in sabotaging a genuine struggle to defend the basic social and democratic rights of workers. All of these pro-capitalist unions support the IMF-dictated restructuring of the CEB, like the opposition parties with which many of them are affiliated. Their appeal is for negotiations on how the restructuring is implemented.

Starmer government plans privatisation and destruction of National Health Service

Robert Stevens

Labour’s Health Secretary Wes Streeting has made a series of high-profile interventions exposing the reality of the Starmer government’s “10 Year Health Plan for England”.

Claiming to want to save a National Health Service (NHS) in “critical condition” and “standing at an existential brink”, Labour intends to ramp up privatisation by stealth and other measures that will end in the death of the state-run service.

Wes Streeting, Secretary of State for Health and Social Care, July 3, 2025 [Photo by House of Commons/Flickr / CC BY-NC-ND 4.0]

Launched in July, the 10 Year Plan claimed it would make the NHS in England “Fit for the future” under conditions in which Streeting was denouncing resident doctors (formerly junior doctors) for demanding a pay increase after being underfunded for years.

The document dressed up Labour’s real plan for cuts, massive productivity increases and ramped-up privatisation behind a swarm of buzzwords. Its core components include a “new care model” centred on community rather than hospital settings, and the creation of a “Neighbourhood Health Service, designed around you.”

The NHS would be shifted from “From analogue to digital”, so that “patients will have a ‘doctor in their pocket’ in the form of the NHS App, while staff will be liberated from a burden of bureaucracy and administration.”

The abolition of “bureaucracy” runs like a red thread throughout the document. What this means is the loss of thousands of administration workers whose jobs are in fact critical to the running of the NHS. “NHS England, the headquarters of the NHS,” will be combined “with the Department of Health and Social Care (DHSC), reducing central headcount by 50%.”

Labour’s plan envisages an even smaller workforce in 10 years than that mapped out by the last Conservative government. It boasts that by 2035 “there will be fewer staff than projected in the 2023 Long Term Workforce Plan”,

The overall strategy would be based on “Productivity and a new financial foundation”.

It states, “The era of the NHS’s answer always being ‘more money, never reform’ is over. It will be replaced with a new value-based approach focused on getting better outcomes for the money we spend.” This would “restore financial discipline by ending the practice of providing additional funding to cover deficits,” i.e., letting the service bleed to death.

The main task was to “urgently resolve the NHS’s productivity crisis,” to make the workforce work harder for less. “For the next 3 years we have set the NHS a target to deliver a 2% year-on-year productivity gain.”

What is meant by a new financial foundation is to “develop a business case for the use of public private partnerships (PPPs) for neighbourhood health centres, ahead of a final decision at the autumn budget.”

Streeting is therefore preparing to burden the NHS with yet more vast debts, while handing over additional tens of billions to the private sector through a de facto return of the disastrous Private Finance Initiative (PFI) scheme, imposed to devastating effect by the last Labour government of Tony Blair and Gordon Brown before it was voted out of office in 2010.

Earlier this month the Financial Times reported, “The government has sounded out private finance investors about backing up to 200 neighbourhood health centres.” It noted, “Investors would win long-term contracts to design, build and manage local NHS centres with the aim of having one in every community by 2035 and the most deprived areas targeted first…” The plan would again see the public sector “provide the land while private companies deliver the facilities and services on contracts of between 25 and 30 years.”

It adds, “People familiar with the matter said at least two ‘market testing sessions’ were held over the summer by the health department, which is being advised by management consultancy Deloitte and law firm Addleshaw Goddard and working with the new National Infrastructure and Service Transformation Authority.”

The Guardian revealed Wednesday that Deloitte and Addleshaw Goddard are receiving contracts worth £3 million each, as they work out the finer points of the privatisation. This month Streeting announced the location of the first 43 centres to be set up under the PFI operation.

The 1997-2018 PFI deals left a staggering debt legacy of £80 billion for just £13 billion of actual investment. Most of this debt (more than £40 billion) won’t be finally paid off by NHS Trusts until the end of the 2040s.

On Monday, the Department of Health and Social Care revealed that productivity in hospital trusts in England in 2024-25 had increased by 2.7 percent. This is above the target of 2 percent growth in productivity each year envisaged in the 10 Year Plan, aimed at cutting NHS costs by £17 billion by 2028-29.

In response, Streeting took to the Times to pen an op-ed declaring that the figures demonstrated the need for a “relentless focus on productivity” to overcome an inefficiency “doom loop” as “reforming the NHS is one of the most important economic missions of this government”.

Streeting took the opportunity to declare that productivity increases were central to “balancing the books” and under the 10 Year Plan, “The NHS will no longer receive emergency top-ups to plug deficits. The outdated system of paying trusts the same regardless of how many patients they see is being dismantled.” He threatened, “Pay is being linked to performance, poor care will no longer be rewarded, while excellence will be.”

Streeting’s “reform” rhetoric is code for the worst attack on the NHS and its workforce since it was founded 77 years ago as the jewel in the crown of the post-war welfare state. In declaring that the NHS will receive no new money, no matter what emergency—with just a few months to go before the annual NHS winter crisis—Labour has declared war on its more than 1.4 million strong workforce and a service on which most British workers exclusively depend.

The NHS has already been deprived of hundreds of billions of pounds by successive governments. According to research by the British Medical Association (BMA), the NHS would have received an additional £423 billion if the historical average growth in spending had continued since 2009/10.

To enforce productivity increases and further inroads by the profiteers, Streeting is reliant on the trade union bureaucracy. The 10 Year Plan states that the government will “continue to work with trade unions and employers to maintain, update and reform employment contracts and start a big conversation on significant contractual changes that provide modern incentives and rewards for high quality and productive care.”

The health care unions ensured that strikes in the NHS and those in the private sector were largely extinguished as they backed Starmer’s Labour government coming to power.

Following five days of strikes by resident doctors in England over the summer—in pursuit of pay restoration that the sellout deal that the BMA signed with the incoming government denied them—Streeting has declared that no new money will be offered. Last week he called on the BMA leadership to end the dispute, declaring, “I need partners, not adversaries.”

Resident doctors picket at Queen Alexandra Hospital Portsmouth

The BMA remains in talks with the Health Ministry and has called no further industrial action despite holding a six-month mandate for further industrial action until January 2026.

The fight to defend the NHS cannot be left to the unions, which have betrayed countless struggles of their members. Neither can it be left to what remains of the “left” within the Labour Party or those gathered around Jeremy Corbyn and Zarah Sultana in Your Party.

These forces cannot defend the NHS because they refuse to challenge the capitalist system and call only for the mildest reforms—as the ruling elite is demanding the destruction of every social gain of the working class to fund a vast military rearmament. As leader of the Labour Party, Corbyn opposed the development of a mass strike movement within the NHS against the Tories, consistently calling for the unions and management to negotiate deals preventing a genuine fightback.

US bankrolls fascist Milei regime ahead of Argentine elections

Andrea Lobo

President Donald Trump greets Argentine President Javier Milei in New York City, September 23 [Photo: White House]

US Treasury Secretary Scott Bessent announced Wednesday a potential $20 billion currency swap arrangement with the government of fascist President Javier Milei in Argentina in a brazen act of election meddling.

Using the funds of the US state to prop up a regime whose support is collapsing ahead of the October 2025 legislative elections and already casting a shadow over the 2027 presidential contest, Bessent was unambiguous in framing the intervention as a direct “endorsement” of Milei.

The Argentine president’s approval rating fell below 40 percent for the first time this month amid an unraveling corruption scandal involving paybacks to his sister through the National Agency for the Disabled.

For Argentina, the swap means the US Treasury would transfer US dollars to Argentina’s central bank, with Argentina supplying pesos in return. This acts as a line of credit or liquidity support—Argentina gets access to the dollars it desperately needs to pay debts and import, and prevent a currency run.

Bessent confirmed that the Trump administration is also preparing to buy up Argentine sovereign bonds and provide massive emergency financing through the US Exchange Stabilization Fund (ESF). Established in 1934, the ESF is a US Treasury slush fund designed to intervene in currency and bond markets to “support allied economies” and “mitigate monetary instabilities”—typically in crisis situations, as with the $20 billion swap extended to Mexico during the Tequila Crisis of 1995.

Every aspect of the US-Argentine deal is characterized by naked political interference in the name of “market reforms,” with the chief aim of reasserting US imperialist control in the face of China’s growing influence across the continent.

This intervention must be read in the context of increasingly open threats of economic and even military retaliation by Washington against governments across Latin America that present the slightest resistance to its domination. This includes new sanctions and tariffs against Lula da Silva’s administration in Brazil for the conviction of Trump ally Jair Bolsonaro—paired with a military buildup in the Caribbean aiming to orchestrate a putsch or military intervention against Venezuela’s Nicolás Maduro government.

Bessent’s “all options for stabilization” unmistakably targets Beijing. The swap is explicitly conditioned on countering “China’s interference in the territory,” according to Casa Rosada officials quoted in Argentine media. Bessent’s veiled threats included stipulations to halt financial deals between Buenos Aires and Beijing, effectively demanding that Milei sever Argentina’s $20 billion currency swap line with China, which remains partially active in an economy on financial life support.

Discussions are also underway about new legislation to permit further entry of foreign (i.e., US) troops, deepening the already advanced process of converting Argentina into an outpost for American imperialism in Latin America’s Southern Cone.

Bessent’s glowing reviews of Milei’s record—insisting that Argentina is “doing a fantastic job” and that his “broad liberalization of prices” and “deregulation” constitute “important strides toward stabilization”—are patently absurd when confronted with the reality of Argentina’s deepening financial disaster.

Far from stabilizing anything, Milei’s “shock therapy” has hit the working class with unprecedented austerity: collapsing wages, a steep recession, mass layoffs, social spending cuts, and a spike in poverty, all amidst “critically low” reserves acknowledged by the IMF. Only last week, the central bank spent $1.1 billion in reserves in three days to prop up the peso, following another wave of devaluations, merely months after Milei loosened currency controls in line with IMF diktats.

While the US pledge briefly steadied the peso (now up about 7 percent to the dollar), financial commentators have warned that stabilization is fleeting without a radical improvement in Argentina’s fundamentals, which remain grimly negative.

It is not only a matter of Trump and Milei’s “kindred spirits.” Wall Street as a whole has weighed in alongside Washington, with the World Bank accelerating $4 billion in new loans (from a $12 billion package) for mining, critical minerals, tourism, and energy infrastructure. The Inter-American Development Bank (IDB) simultaneously announced $2.9 billion for “structural reforms” and another $1 billion for “strategic sectors”.

Meanwhile, the IMF—already engaged in its largest-ever $44 billion program with Argentina—has signaled flexibility on technical targets due to Milei’s suppression of wages and social outlays, even as reserves hover at “critically low” levels.

All this largesse and “reforms” come with a price: the unqualified enforcement of market fundamentalism, the conversion of the Argentine working class into a test case for the region, and the prying open of Argentina for further looting by transnational corporations, above all US and allied interests.

This convergence of finance and authoritarian reaction was underscored as Milei received the Atlantic Council’s Global Citizen Award at a gala in midtown New York, where he loudly praised Trump’s authoritarian rhetoric, attacks on immigrants.

The deal with Trump took place during a meeting on the sidelines of the UN General Assembly, where Milei decried the “inadmissible escalation of leftwing political violence globally”—mimicking Trump’s own fascist speech. These displays are not simply affinities; they are a unification of methods by Wall Street and its political frontmen.

This massive backstopping is the clearest evidence of Trump’s—and by extension the American ruling class’s—elevation of the “loco” Milei as “a systematically important ally,” in the words of Bessent. It is the forging of an axis of brittle, authoritarian regimes ruthlessly determined to crush working class opposition, from the Southern zone to Washington.

After all, the American intervention in Argentina is in part aimed at stemming a fall in confidence in the US dollar itself—a confidence that underlies the ability to continue expanding the gargantuan US federal debt to pay for war and bailouts for the rich.

Within Argentina, the aim is to support Milei government’s continuation of its austerity and authoritarian drives. His regime has issued repeated vetoes on pension and university budget increases, even as it prosecutes, criminalizes and represses mass protests.

As Bessent made his announcement Wednesday, federal police launched yet another brutal onslaught against pensioners protesting in front of the Argentine Congress, leaving 10 demonstrators injured. The past two weeks have seen repeated mass protests against Milei’s vetoes, in the context of similar demonstrations against the far-right governments in Ecuador and Peru.

The violent, dictatorial methods now being refined in Buenos Aires are being prepared for use against all opposition, including in the United States. Milei has orchestrated a campaign that promotes the legacy of the 1976-83 dictatorship, whose methods of torture and mass murder killed at least 30,000 Argentine workers, students and opponents of the military regime.

As Trump pursues a presidential dictatorship based on the military-police apparatus, the enormous political and now financial backing for Milei is among the most alarming warnings for the American working class of the support for such brutal methods of fascist authoritarianism.

All these maneuvers indicate that Washington is committed to preserving Milei’s rule at any cost. But the fact that the Peronists have gained new life by posturing as an “opposition” to Milei’s catastrophe can only be understood as the result of the so-called “Left and Workers’ Front” (FIT-U), whose disparate groupings continue their historic role of steering mass anger into the dead-end of illusions in Peronism, traditionally the preferred tool of capitalist rule in Argentina, and providing a political buffer for the capitalist system itself.