A whopping 46 of the banks the government bailed out last year are behind on their payments, with some going belly-up despite the rescue. The largest so far, CIT Group, is in bankruptcy court today hoping to wipe out the $2.3 billion it owes Uncle Sam, and analysts tell the Washington Post that’s just the tip of the iceberg.
Ex-auto bailout czar Steve Rattner says GM’s unlikely to repay its full debt. AIG might, but it’s dismantling itself and holding fire sales to do so. In the case of CIT, the largest lender to small businesses, “the $2.3 billion was wasted,” says one credit analyst. “They didn’t save CIT, and they didn’t save the taxpayers’ money.” Another analyst says even last year CIT’s business model was “basically broken,” and that there “ought to be a lot of questions asked” about its bailout.