Editor’s Note: CIT has been followed by us for some time. They have been in trouble for quite some time. I believe they should get access on the grounds that GE’s financing unit has gotten some assistance as well. CIT provides secured business financing and in this environment that segment of the market has been hit hard and it is getting increasingly harder for small and medium size businesses that were quite viable in a normal economic environment to get funding to bridge the gap until we have a real recovery. It would be a sad state of affairs if this funding became even harder to come by and more businesses would go out of business because of this unique situation. I don’t support government bailouts but if we are going to do it, then we better make sure we help the small guys along with the large corporations.
News (Reuters):
CIT Group Inc. said it is in active talks with the U.S. government to gain access to a key lending program, as the commercial lender’s stock fell to a record low on Friday on concerns that it would be excluded.
The shares fell as much as 39.2 percent on reports the Federal Deposit Insurance Corp will reject the New York-based company’s effort to join its Temporary Liquidity Guarantee Program because CIT’s credit quality is worsening.
The program has allowed dozens of financial services companies, many of which are suffering big losses, to sell “triple-A” rated debt at low cost. Through May 31, about $345.8 billion of debt issued under the program was outstanding, according to the FDIC website.
CIT said it is having an “active dialogue” with the government, but that there is no guarantee the FDIC will approve its application.
The lender to small- and mid-sized businesses became a banking company in December and obtained $2.33 billion of funds from the federal Troubled Asset Relief Program.
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