Eurodollar University HOLY SH*T! More Subprime Lenders Just Collapsed (Something BIG Is Happening)
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Oct 24, 2025 Recent failures in shadow banking highlight serious issues with collateral, including a subprime auto lender's struggles and a telecom firm's alleged fraudulent invoices. The discussions delve into the implications of delayed invoice payments on cash flows and the broader economic slowdown's impact on credit markets. Additionally, the link between complacency in lending practices and current financial stress is explored, alongside warnings from UK officials about the risks of private credit, drawing parallels to past financial crises.
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Rising Shadow-Bank Casualties
- Shadow banking failures are multiplying and collateral problems are the repeating theme.
- Multiple small collapses together signal a growing systemic fire under the surface of finance.
Primalend And Subprime Auto Collapse
- Primalend Capital Partners financed subprime auto dealers using car loans and inventory as collateral.
- Falling used-car prices and rising delinquencies weakened that collateral and squeezed funding terms.
Collateral Decline Amplifies Credit Tightening
- Declining collateral values force factorers to demand higher rates and stricter terms.
- That increases funding costs for middlemen and tightens credit to subprime borrowers, amplifying a credit crunch.