No rescue for CIT, taxpayers lose $2.3 billion

July 16, 2009
cit

CIT’s press release this evening:

CIT Group Inc….has been advised that there is no appreciable likelihood of additional government support being provided over the near term.

The Company’s Board of Directors and management, in consultation with its advisors, are evaluating alternatives.

The company likely has only one alternative….bankruptcy.

With the fall in CIT’s preferred stock, taxpayers’ money is already lost.  WSJ:

U.S. Treasury Department officials believe they will lose their entire $2.3 billion investment in CIT Group Inc., a spokeswoman said, which could mark the first loss of public money injected in banks through the Troubled Asset Relief Program.

Big kudos to Sheila Bair.  Everyone wanted her to open up the debt guarantee program and she said no.  This is progress, folks.  Bankruptcies, not bailouts, are the proper way to work out bad debts.  Extending a bigger lifeline would only compound taxpayer losses.

Comments

Good job, Sheila. But someone at the Fed screwed up big time approving CIT for bank holding company status and for giving them $2.33 billion in TARP money—with which they did not increase lending but paid bonuses in February, 2009(after close to EIGHT consecutive quarters of losses!!)

Posted by ex-banker | Report as abusive
 

Not enough union membership. Sorry.

Posted by grunk | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •