CIT Bust Would Cost US $2.3B, Earn Goldman $1B
Taxpayers shares could go up in smoke while Goldman gains
By Jason Farago,  Newser Staff
Posted Oct 5, 2009 4:29 AM CDT
A pedestrian strolls past the the CIT Group Inc. building in New York.   (AP Photo/Bebeto Matthews)
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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.