Major Small-Business Lender Faces Bankruptcy

Treasury 'drawing line in sand,' says analyst

(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. More»

Bailed-out firm's move will cost government $2.3B

(NEWSER) - CIT Group, a major lender to small and medium-sized American businesses, filed for Chapter 11 today. The move means the government is most likely out the $2.3 billion in TARP bailout funds it put up last year. The "prepackaged" procedure is intended to allow CIT, which reported $71 billion in assets and $64.9 billion in liabilities, to emerge from bankruptcy protection by the end of the year, CNN Money reports. More»

(NEWSER) - CIT Group Inc. has made a deal for a $3 billion rescue package from bondholders to stay afloat, Reuters reports. The board of the lender, which was facing bankruptcy, struck a tentative agreement tonight. It includes high interest rates and apparently lacks long-term solutions, reports the Wall Street Journal. But the stopgap measure buys CIT time to stabilize by transferring assets to its bank in Utah—if the federal government agrees—and make debt-exchange offers to bondholders. More»

CIT bankruptcy will cost taxpayers $2.3B

(NEWSER) - 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. More»

Taxpayers shares could go up in smoke while Goldman gains

(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. More»