Beyond the large regional banks, Jefferies is now also in the spotlight.
Scenes of panic have unfolded over the past hours across global markets, with insiders—and those who heard JP Morgan CEO Jamie Dimon a few days ago—already making escape plans from the looming crash.
The collapse of First Brands Group and Tricolor Holdings has already impacted regional, but significant, banks like Zions Bancorp and Western Alliance Bancorp.
The thread is beginning to unravel, with Wall Street now essentially in a panic room, bracing for the next phase of the era of uncontrolled capital.
High risk
In the cases of Zions and Western Alliance, the alleged responsible parties were the same.
Investment funds connected to Andrew Stupin and Gerald Marcil, among others, borrowed capital to finance the purchase of troubled commercial loans.
A lawsuit from Zions revealed that its subsidiary, California Bank & Trust, provided $60 million to the borrowers, and an investigation showed that many of the loans and underlying properties were transferred to other entities.
Stupin’s and Marcil’s lawyers countered that the allegations are “vigorously contested.”
These revelations add to other recent loan collapses, such as that of Tricolor Holdings, a high-risk auto lender, which filed for bankruptcy last month and wiped out some debts entirely.
This was followed by the collapse of First Brands Group, an auto parts supplier, which owed over $10 billion to some of Wall Street’s biggest names.
Although Zions and Western Alliance reported relatively small losses due to the alleged fraud, investor reaction was far more severe: 74 of the largest U.S. banks lost over $100 billion in market value on Thursday, October 16, 2025.
“Hellish” night at Goldman Sachs
On Thursday, October 16, 2025, Goldman Sachs analysts and traders experienced a nightmare.
The moves of regional banks were extremely large, triggering reactions from Goldman clients, with traders describing behavior as “beyond limits.”
According to Mike Washignton of Goldman Sachs, issues related to weak credit exposure forecasts caused the second worst day for the sector since the collapse of Silicon Valley Bank in March 2023.
Uncertainty is widespread, and as Washington notes, calls to banking desks asking “WHAT IS HAPPENING WITH FINANCIAL COMPANIES” have surged.
Goldman, monitoring the state of regional banks, remains on alert for NDFI credit (loans to non-depository financial institutions), following Zion’s announcement of a $50 million loss from two risky loans.
Why Jamie Dimon warns about “cockroaches”
Amid all this, memories of the collapse of two Bear Stearns hedge funds—which were over-leveraged and collapsed in 2007—resurface.
Most at the time didn’t pay much attention, as Wall Street was at historic highs.
But it later became clear that these bankruptcies were one of the first dominoes that led to the global financial system collapse.
JP Morgan CEO Jamie Dimon, who rescued Bear Stearns in 2008 when it was on the brink of bankruptcy, recently warned that behind Wall Street’s new records, risk may be hiding again.
First, last month, a subprime auto lending dealership went bankrupt.
Its collapse was attributed to a large number of risky loans and significant fraud.
Then, Wall Street was shaken by the collapse of First Brands, an auto parts supplier built on complex and hidden loans, leaving many financial firms exposed to bankruptcy.
“My antennas go up when things like this happen,” Dimon said on Tuesday, October 14, 2025, during a conference call with analysts.
“And I probably shouldn’t say this, but when you see one cockroach, there are likely more. I want to warn everyone about this.”
Spotlight on DoorDash, Guardant Health, and Zions
First Brands, known mainly for selling essential auto parts such as oil filters, brake pads, and windshield wipers, filed for bankruptcy last month after investors discovered billions in off-balance-sheet private debt.
Among the revelations, approximately $2 billion of investor money could not be justified.
This discovery triggered a collapse in investor confidence.
First Brands’ bankruptcy, which had significant exposure to opaque private debt markets, raises concerns that more bad loans may be hidden on bank balance sheets.
These concerns intensified with two regional bank disclosures: Zions Bancorporation and Western Alliance, which announced exposure to loans granted to alleged fraudulent investors.
Zions, based in Salt Lake City, reported a $50 million Q3 loss from two loans it had issued.
Similarly, Western Alliance of Phoenix filed a lawsuit against a borrower who failed to provide guarantees for its loans.
Concerns are not limited to these two banks.
The SPDR S&P Regional Banking ETF (KRE), tracking regional banks, fell 6% yesterday.
Twelve of the fifteen largest losses in the S&P Midcap 400 index involved regional banks.
Impact of the First Brands bankruptcy
Jefferies was also exposed to First Brands’ bankruptcy, as the financial firm had dealings with the controversial auto parts giant across several business lines.
Its Wall Street stock has dropped 25% in the past month.
Jefferies had issued approximately $48 million in loans to First Brands.
Company executives stated that any losses from First Brands’ bankruptcy could be “handled immediately,” according to a statement released this week.
First Brands had accumulated significant debt over the past five years, acquiring more than 20 companies.
The company filed for bankruptcy at the end of September and is now under federal investigation for off-balance-sheet debt.
Jefferies initially estimated First Brands’ debt at $5.9 billion, while bankruptcy advisors found it now totals $11.6 billion, according to the Wall Street Journal.
Memories of the 2023 banking crisis
Earlier in September, Tricolor Auto Group, a subprime auto finance company, also filed for bankruptcy.
Fifth Third Bank reportedly faced about $200 million in risk when Tricolor declared bankruptcy.
Reports indicate JPMorgan and Barclays were also exposed.
The stock declines sparked fears of a repeat of the 2023 banking crisis, which began with the failure of Silicon Valley Bank due to mismanaged U.S. Treasury bond investments.
Jefferies leaders warned investors not to overestimate the situation:
“We believe there has been an overreaction in our stock value and in perceptions of our credit profile, and we expect this to correct soon as the events and the extent of outcomes become better understood,” said CEO Rich Handler and President Brian Friedman of Jefferies.
www.bankingnews.gr
The collapse of First Brands Group and Tricolor Holdings has already impacted regional, but significant, banks like Zions Bancorp and Western Alliance Bancorp.
The thread is beginning to unravel, with Wall Street now essentially in a panic room, bracing for the next phase of the era of uncontrolled capital.
High risk
In the cases of Zions and Western Alliance, the alleged responsible parties were the same.
Investment funds connected to Andrew Stupin and Gerald Marcil, among others, borrowed capital to finance the purchase of troubled commercial loans.
A lawsuit from Zions revealed that its subsidiary, California Bank & Trust, provided $60 million to the borrowers, and an investigation showed that many of the loans and underlying properties were transferred to other entities.
Stupin’s and Marcil’s lawyers countered that the allegations are “vigorously contested.”
These revelations add to other recent loan collapses, such as that of Tricolor Holdings, a high-risk auto lender, which filed for bankruptcy last month and wiped out some debts entirely.
This was followed by the collapse of First Brands Group, an auto parts supplier, which owed over $10 billion to some of Wall Street’s biggest names.
Although Zions and Western Alliance reported relatively small losses due to the alleged fraud, investor reaction was far more severe: 74 of the largest U.S. banks lost over $100 billion in market value on Thursday, October 16, 2025.
“Hellish” night at Goldman Sachs
On Thursday, October 16, 2025, Goldman Sachs analysts and traders experienced a nightmare.
The moves of regional banks were extremely large, triggering reactions from Goldman clients, with traders describing behavior as “beyond limits.”
According to Mike Washignton of Goldman Sachs, issues related to weak credit exposure forecasts caused the second worst day for the sector since the collapse of Silicon Valley Bank in March 2023.
Uncertainty is widespread, and as Washington notes, calls to banking desks asking “WHAT IS HAPPENING WITH FINANCIAL COMPANIES” have surged.
Goldman, monitoring the state of regional banks, remains on alert for NDFI credit (loans to non-depository financial institutions), following Zion’s announcement of a $50 million loss from two risky loans.
Why Jamie Dimon warns about “cockroaches”
Amid all this, memories of the collapse of two Bear Stearns hedge funds—which were over-leveraged and collapsed in 2007—resurface.
Most at the time didn’t pay much attention, as Wall Street was at historic highs.
But it later became clear that these bankruptcies were one of the first dominoes that led to the global financial system collapse.
JP Morgan CEO Jamie Dimon, who rescued Bear Stearns in 2008 when it was on the brink of bankruptcy, recently warned that behind Wall Street’s new records, risk may be hiding again.
First, last month, a subprime auto lending dealership went bankrupt.
Its collapse was attributed to a large number of risky loans and significant fraud.
Then, Wall Street was shaken by the collapse of First Brands, an auto parts supplier built on complex and hidden loans, leaving many financial firms exposed to bankruptcy.
“My antennas go up when things like this happen,” Dimon said on Tuesday, October 14, 2025, during a conference call with analysts.
“And I probably shouldn’t say this, but when you see one cockroach, there are likely more. I want to warn everyone about this.”
Spotlight on DoorDash, Guardant Health, and Zions
First Brands, known mainly for selling essential auto parts such as oil filters, brake pads, and windshield wipers, filed for bankruptcy last month after investors discovered billions in off-balance-sheet private debt.
Among the revelations, approximately $2 billion of investor money could not be justified.
This discovery triggered a collapse in investor confidence.
First Brands’ bankruptcy, which had significant exposure to opaque private debt markets, raises concerns that more bad loans may be hidden on bank balance sheets.
These concerns intensified with two regional bank disclosures: Zions Bancorporation and Western Alliance, which announced exposure to loans granted to alleged fraudulent investors.
Zions, based in Salt Lake City, reported a $50 million Q3 loss from two loans it had issued.
Similarly, Western Alliance of Phoenix filed a lawsuit against a borrower who failed to provide guarantees for its loans.
Concerns are not limited to these two banks.
The SPDR S&P Regional Banking ETF (KRE), tracking regional banks, fell 6% yesterday.
Twelve of the fifteen largest losses in the S&P Midcap 400 index involved regional banks.
Impact of the First Brands bankruptcy
Jefferies was also exposed to First Brands’ bankruptcy, as the financial firm had dealings with the controversial auto parts giant across several business lines.
Its Wall Street stock has dropped 25% in the past month.
Jefferies had issued approximately $48 million in loans to First Brands.
Company executives stated that any losses from First Brands’ bankruptcy could be “handled immediately,” according to a statement released this week.
First Brands had accumulated significant debt over the past five years, acquiring more than 20 companies.
The company filed for bankruptcy at the end of September and is now under federal investigation for off-balance-sheet debt.
Jefferies initially estimated First Brands’ debt at $5.9 billion, while bankruptcy advisors found it now totals $11.6 billion, according to the Wall Street Journal.
Memories of the 2023 banking crisis
Earlier in September, Tricolor Auto Group, a subprime auto finance company, also filed for bankruptcy.
Fifth Third Bank reportedly faced about $200 million in risk when Tricolor declared bankruptcy.
Reports indicate JPMorgan and Barclays were also exposed.
The stock declines sparked fears of a repeat of the 2023 banking crisis, which began with the failure of Silicon Valley Bank due to mismanaged U.S. Treasury bond investments.
Jefferies leaders warned investors not to overestimate the situation:
“We believe there has been an overreaction in our stock value and in perceptions of our credit profile, and we expect this to correct soon as the events and the extent of outcomes become better understood,” said CEO Rich Handler and President Brian Friedman of Jefferies.
www.bankingnews.gr
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