Bankruptcy Looms as Feds Refuse to Bail Out CIT Group

Treasury 'drawing line in sand,' says analyst
By Rob Quinn,  Newser Staff
Posted Jul 16, 2009 2:47 AM CDT
Pedestrians pass the the CIT Group Inc. building in New York yesterday. Trading in the shares of the commercial lender has been halted while regulators pore over its books.   (AP Photo/Bebeto Matthews)
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(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.

Insiders say that the Treasury's decision came after lengthy debate, in which it decided to "draw a line in the sand" on bailouts. "They must have realized if they were going to support CIT, there was no end, it was a bottomless pit and anyone could show up with any excuse" demanding a government bailout, said an analyst.