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MONDAY, NOVEMBER 23, 2009
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7

CIT Bust Would Cost US $2.3B, Earn Goldman $1B

Taxpayers shares could go up in smoke while Goldman gains

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(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.

A pedestrian strolls past the the CIT Group Inc. building in New York.
A pedestrian strolls past the the CIT Group Inc. building in New York.   (AP Photo/Bebeto Matthews)
Struggling CIT launched a debt restructuring effort that should trim at least $5.7 billion from its balance sheet.
Struggling CIT launched a debt restructuring effort that should trim at least $5.7 billion from its balance sheet.   (AP Photo/Seth Wenig, file)
Pedestrians walk past a CIT Group logo in New York.
Pedestrians walk past a CIT Group logo in New York.   (AP Photo/Seth Wenig, file)
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MarkMcJackoff
Oct 5, 09 5:29 AM CDT
Wow! You gotta love dem Credit Default Swaps - another completely unregulated market that allows the smarter cats on the street ie Goldman - to make a laughing stock of the US Treasury and Taxpayer. While we get royally hosed yet again the Goldman bonuses will be reassuringly obscene as usual . How is it the US Treasury plays second fiddle to GS in a situation like this - whatever happened to LIFO? And what is Obama and his crew doing about this huge clusterfuck? Reply
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+5
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0001tr
Oct 5, 09 7:31 AM CDT
what will it take for Amerians to realize "this is, and always has been the plan and simply the way things operate now...The U.S. Gov't is nothing more than a small group of puppetts that are in bed with the powerfully elite and ALL are profiting from our ignorance...oh well at least we are aware of the latest weight problems of Alley, the most yards rushing this week, and the latest to fall from dancing with the stars, oh yeah and where O had his Anniversary dinner.
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0
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Fondue
Oct 5, 09 9:04 AM CDT
Not that ignorance isn't a problem, but what happens when everyone is enlightened? We have no referendum on elected officials, no term limits except for the Executive, and no "major" party willing to do something about it.
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divetrader
Oct 5, 09 6:24 AM CDT
This is sick! Reply
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+1
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Thinker
Oct 5, 09 6:40 AM CDT
But it will happen. And Goldman will get even richer. And we will continue to get F'd up the ass until we the people, as a cohesive whole, rise up and lynch the rich. And stop vilifying socialism. The rich will still be rich, we'll just be less poor and sick and hungry.
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