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

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 CIT Group stories.)