According to Reuters, the FDIC may not allow CIT to access TLGP funds thereby propelling CIT into bankruptcy.
The government has made it clear that a possible bankruptcy by CIT is not seen as a systemic risk to the financial system, the Wall Street Journal reported, since other lenders including JPMorgan Chase & Co or Deutsche Bank AG can take on many of the same loans in which CIT specializes.
"I don't think it (a possible bankruptcy) would have a wide impact. We're not talking about a systemic issue," said on Sunday a restructuring adviser with extensive experience working with companies in the financing sector. The adviser declined to be named due to the sensitivity of the topic.
Perhaps not a systemic risk, that does not mean there would not be consequences
"It's a difficult lending environment, and those small retailers that have seen sales slow to a minimum already may have a hard time securing lending sources until spending picks up," said Melinda Crump, a spokeswoman for Sageworks Inc, which tracks and collates the financials of thousands of privately held U.S. companies, in an email.
Businesses that require substantial working capital depend on credit. Changes in financing options could force small businesses into tough choices such as having to fund a portion of their growth from cash flow until other sources of lending were to become available, she said.
Among its services, CIT provides financial products and advice to small and middle market businesses. It has more than $60 billion in finance and leasing assets and operates in more than 50 countries across 30 industries.
It will let it fail.
If Goldman Sachs doesn't like CIT. Goldman Sachs determines who gets saved and who doesn't.
An leaked internal CIT memo says that 300,000 retailers and over 700 manufacturers would be at risk if CIT fails.
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Goldman Sachs is considering the bail out.
Geithner Says U.S. Has Authority to Address CIT
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Goldman Sachs may have made decision on CIT bail out.
Goldman Sachs announces that it has 'no material exposure' to CIT. That could mean CIT is doomed.
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what exactly is CIT?
I'm seeing all of these reports, including Bloomberg's latest that somehow this is directly tied to manufacturing, but I know little about CIT. From the CIT Group website, it appears they are heavily focused on trade loans, services and that would imply manufacturing.
So, do we have yet another example here where manufacturing gets the shaft while huge Zombie banks who provide little to the real economy (ya know, make real things?) get the cash?
Yes, the did a lot manufacturing and retail lending
and that was probably where they started but of course they thought they could expand into other areas such student loan. Here is a link to their 10-Q filed on May 11, 2009:
Link
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student loans
are being restructured, no? Maybe this is what is going them into trouble? I mean this seems very odd on unequal treatment vs. something like Citigroup.
it sounds like they have a serious liquidity problem.
They borrowed short-term and lend long-term. The problem is that short-term borrowings are coming due - they have $10 billion in 2010 and it sounds like they are having a difficult time refinancing that - the loan portfolio is contributing to the problem.
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Going, going ....
bankrupt by opening bell
It sounds like Goldman Sachs made its decision.
They need time to make sure that their statement from the other day was correct: "no exposure".
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CIT woes may disrupt retailers holiday plans
Reuters
Holiday Inventories held up? More lost revenue - more CRE distress
hmmmm
what would be interesting is to see what is the total GDP contribution of CTI's clientele. The claim is they don't "pose systemic risk" but I doubt that.....there are two things that the government shits on every time:
1. manufacturing
2. small business