Egan-Jones Links Tricolor Collapse to Foreseeable Credit Warning Signs

The firm points to a trio of trends that converged to squeeze the lender: rising consumer loan delinquencies, surging financing costs, and plummeting used vehicle prices. Consumer loan delinquencies at commercial banks nearly doubled, climbing from 1.5 percent in 2021 to 2.8 percent by late 2024. Simultaneously, new auto loan rates jumped from 4.5 percent to 8.4 percent, while the valuation of the collateral backing the firm’s debt eroded.

Egan-Jones challenges the narrative that fraud renders such collapses unpredictable. Instead, the firm maintains that financial malfeasance often emerges from borrowers struggling to conceal their deteriorating condition. While acknowledging that rising costs and falling collateral values do not constitute definitive proof of misconduct, the analysis suggests these shifts provided a clear mandate for enhanced due diligence. By tracking these metrics, the firm claims investors can identify systemic strain before it culminates in insolvency, citing its past involvement in flagging the 2008 credit crisis and the failures of Enron and WorldCom.