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Goldman Sachs CEO Lloyd Blankfein has an image problem on his hands.
The most ardent critics of his firm are likening it to a blood-sucking vampire, while others simply see the Wall Street investment bank as a greedy and ruthless financial titan. But there is a way for Blankfein to start turning public opinion around, and that involves a quick buyout of ailing mid-market lender CIT Group, which provides financing to some retailers, manufacturers and aviation operators.
While a collapse of New York-based CIT would not pose the kind of systemic risk that last September’s bankruptcy of Lehman Brothers did, the lender’s sudden disappearance from the market would make it even more difficult for some small- and mid-sized American companies to finance their operations.
A CIT bankruptcy would also prolong the worst recession since the Great Depression and rekindle investor jitters about the overall strength of the financial sector.
But Goldman could easily avert a crisis in mid-America by swooping in and buying the lender, which has some $60 billion in debt. It wouldn’t take much for Goldman, which last summer provided $3 billion in secured financing to CIT, to get a deal done.