Cantor: No Bailouts, Bankruptcy for States

Idea kept under wraps over market fears

(NEWSER) - As cash-strapped states scrabble to fix budgets and pay public workers’ pensions, some lawmakers are pointing to bankruptcy as a solution, the New York Times reports. States can't go that route currently because they're technically sovereign entities, but backers say it's a better alternative to what the Times terms "no-strings bailouts." So far, they’re keeping the idea quiet for fear of rattling the municipal bond market. More»

The worst-off are not who you might suspect

(NEWSER) - Forty-four states will likely come up short of their budgets in 2012, a development that has lawmakers considering a special bankruptcy provision for states. But which are deepest in the hole? The Daily Beast crunched the numbers, factoring in not just debt but unfunded pension and health care obligations. Here's the top 10:

1. Rhode Island
2. Connecticut
3. Massachusetts
4. Illinois
5. Hawaii

Bailed-out firm's move will cost government $2.3B

(NEWSER) - CIT Group, a major lender to small and medium-sized American businesses, filed for Chapter 11 today. The move means the government is most likely out the $2.3 billion in TARP bailout funds it put up last year. The "prepackaged" procedure is intended to allow CIT, which reported $71 billion in assets and $64.9 billion in liabilities, to emerge from bankruptcy protection by the end of the year, CNN Money reports. More»

Taxpayers shares could go up in smoke while Goldman gains

(NEWSER) - Troubled commercial lender CIT, circling the drain for more than a year, would cost taxpayers $2.3 billion in shares purchased by the Treasury Department if it files for Chapter 11 soon—but Goldman Sachs, which gave the lender emergency funding, stands to collect a $1 billion windfall if it goes bust. To hedge risk when it loaned CIT emergency funding, bailout-supported Goldman purchased credit default swaps that will pay out if CIT goes bust. Insiders told the Financial Times that Goldman may postpone collecting part of the money. More»

Treasury 'drawing line in sand,' says analyst

(NEWSER) - The Obama administration has rejected CIT Group's pleas for a bailout, and the troubled commercial lender is likely to file for bankruptcy as early as today, reports the Washington Post. CIT—which has already received $2.3 billion in TARP funds—provides financing to close to a million small- and medium-sized businesses, thousands of which may be badly hurt by the lender's demise. More»