"CIT Group files for bankruptcy" by Stephen Manning, Associated Press | November 2, 2009
WASHINGTON - CIT’s filing will test whether a financial company can survive the Chapter 11 process....
The filing would wipe out current holders of its common and preferred stock. That means the US government will probably lose the $2.3 billion it sunk into CIT last year in return for preferred shares to prop up the ailing company. The government could have lost billions more, however, had it not declined to hand over more aid to the company earlier....
How do they know that?
You are just supposed to accept lying government and MSM's word, huh?
Common stockholders with CIT set to lose their investment include Fidelity Investments, with a 9.9 percent stake. CIT has been trying to fend off disaster for several months and narrowly avoided collapse in July. It has struggled to find funding as sources it previously relied on, such as short-term debt, evaporated during the credit crisis.
The company received $4.5 billion in credit from its own lenders and bondholders last week, reportedly made a deal with Goldman Sachs to lower debt payments, and negotiated a $1 billion line of credit from billionaire investor and bondholder Carl Icahn. But the company failed to persuade bondholders to support a debt-exchange offer.
Sort of like MAKING a DEAL with the DEVIL, 'eh?
Analysts warned that the bankruptcy could add to the uncertainty around loans for the nation’s small businesses, especially retailers, which make up a significant portion of CIT’s clients and are already struggling with tight credit markets. CIT is the financier for about 2,000 vendors that supply merchandise to more than 300,000 stores, many of which are gearing up for the critical holiday shopping season. They rely on the lender to cover costs ranging from paying for orders to making payroll.
Any disruption caused by bankruptcy could severely disrupt operations, said Joe Alouf, a partner with Eaglepoint Advisors, a crisis management company. “CIT is the 600-pound gorilla in the industry,’’ Alouf said.
I know of a heavier one.
But CIT has already pulled back sharply on its lending to businesses as it tried to preserve cash....
So THAT is where the LOAN LIQUIDITY went: BANKSTER POCKETS!
--more--"
Related: Who Wants to Buy a Mall?
FLASHBACK:
"Lender CIT in talks about seeking federal aid" By Stevenson Jacobs and Daniel Wagner, Associated Press | July 14, 2009
NEW YORK - In a sign the financial crisis is not yet over, CIT Group Inc., the No. 1 lender to small and mid-size US businesses, is holding advanced talks with the government about receiving emergency federal assistance, officials said yesterday.
Readers, do I have to type it?
Yup, ANOTHER BAILOUT on its way!
A main focus of the negotiations, which involve the Treasury Department and other agencies, is CIT’s request to receive help through a Federal Deposit Insurance Corp. program that would guarantee the ailing lender’s debt, two sources briefed on the talks told the Associated Press. They spoke on condition of anonymity because the negotiations are ongoing.
But the FDIC has so far resisted the idea, the sources said, citing concerns about expanding the Temporary Liquidity Guarantee Program beyond its original purpose as well as the risk of backing CIT’s debt should the company fail....
Related: FDIC Preparing For Massive Bank Failures
A collapse of CIT, whose 1 million clients include big names from the franchisees of Dunkin’ Donuts to retailer Dillard’s Inc., could deal a devastating blow to the economy by cutting off financing just as businesses need it most, analysts warned.
That in turn could force thousands of small and medium-size companies to drastically cut costs or shut down - driving up unemployment and dashing hopes for a swift economic recovery.
It's going up anyway and you guys have been crowing saying it's a lagging indicator. WTF?
“They’d have to lay people off, downsize, and maybe shut their doors,’’ independent banking analyst Bert Ely said of CIT’s clients. “It would hardly be positive for the economic recovery.’’
CIT’s crisis brought back memories of the brutal losses suffered by fallen Wall Street firms like Bear Stearns and Lehman Brothers. It also posed yet another challenge to the Obama administration, which is struggling to right to the economy despite an $787 billion stimulus and a raft of federal bailout programs.
So what you are looking at here was a BIG-TIME LOOTING!
And WHATEVER HAPPENED to those TRILLIONS in LOAN LIQUIDITY Treasury and the Fed tossed into the economy!
Companies that depend on CIT for financing are already weighing the consequences of possibly losing the lender. “If CIT were to go away, it would take a financing option away from our franchisees who want to buy stores or expand their networks,’’ said Michelle King, spokeswoman at Dunkin’ Brands Inc., parent company of the Dunkin’ Donuts chain.
For the apparel industry, a collapse of CIT would have “near cataclysmic,’’ consequences for its small to mid-sized clients, said Andrew Jassin, cofounder of Jassin-O’Rourke Group an apparel consulting company. The retail and apparel industries, which also include CIT clients like Dillard’s and Bon-Ton Stores Inc., is preparing for the critical back-to-school selling period and is in the midst of ordering merchandise for the holidays.
Oh, I SEE WHAT THIS IS! This is a SHAKEDOWN, right?
Crying poverty so they can get the bailout!
“This could affect the lifeblood of the flow of goods to the stores,’’ said Vincent Arscott, senior director of Fitch Ratings.
The LIFEBLOOD?
Stop making an INORGANIC OBJECT (money) into a FEELING THING, you sickening sack of s***!
Apparel industry insiders say it would be very difficult for rivals to absorb CIT’s clients because other lenders are already under financial strain, leaving many orphaned suppliers potentially without any access to financing.
Where did those trillions go!?
Speaking in London, Treasury Secretary Timothy Geithner suggested help could be on the way but gave no specifics.
So WHAT is HE DOING in London and WHY SO QUIET about it, MSM?
