CIT death plunge

CIT stock is trading again after being suspended over the course of what now appear to be failed government bailout talks.

Here’s how shares in the beleaguered corporate-lender have opened:



That’s a drop of some 70 per cent to 40 cents — a market cap slide which increasingly ups the odds of the lender failing to meet its minimum capital ratios and therefore the probability of bankruptcy.

Here’s the impact on the company’s CDS and bonds via the Barclays platform:





What all this of course means is that the US government has decided CIT is not too big to fail, after all.

Something CIT clearly disagrees with if the hints on its website pages are anything to go by.

Here’s CIT’s own opinion, as voiced on their website (H/T Daddy):



Here are some prominently placed views from the industry on the matter:



And here are some rather alarming assessments by the press:



http://ftalphaville.ft.com/blog/2009/07/16/62511/cit-death-plunge/

Obama Administration Considers More Aid for Small Businesses

July 10 (Bloomberg) -- The Obama administration is discussing additional steps to help small businesses weather the recession, possibly with money from the $700 billion bank-rescue program, administration officials said today.

Using money from the Troubled Asset Relief Program enacted last year in conjunction with an existing Small Business Administration loan program is one option under discussion. Another would be to underwrite loans to small businesses, an idea that National Economic Council director Lawrence Summers views as too risky, one of the officials said.

Further assistance to companies and consumers is being debated after a Labor Department report on July 3 showed U.S. employers cut 467,000 jobs in June and the unemployment rate rose to 9.5 percent, the highest since August 1983. An index of consumer sentiment for July fell more than forecast today in response to the dimming employment outlook.

“The popular perception that folks are getting restless about how the government is managing the economy has some backing,” Michael Feroli, an economist at JP Morgan Chase & Co. in New York, said in a report today.

All of the ideas under discussion have drawbacks that would make them hard to implement, an administration official said. Several officials said no plan is imminent, and there is no formal study or proposal on the table.

 

CIT Group May Need $6 Billion to Avoid Bankruptcy, Analysts Say

July 16 (Bloomberg) -- CIT Group Inc., the 101-year-old lender running short of cash, may need as much as $6 billion to avoid seeking bankruptcy protection after the U.S. wouldn’t give the firm another bailout, CreditSights Inc. analysts said.

“CIT indicated that it needs at least $2 billion of rescue financing in the next 24 hours or it would likely file,” said CreditSights analysts including Adam Steer. “We believe the figure is in the range of $4 to $6 billion plus, making outside capital sources shy away.” CIT’s debt tumbled, the shares plunged and the risk of default soared to a record today.

The lender is trying to raise $2 billion from debt holders and gave them 24 hours to put up the money, the Wall Street Journal reported today, citing unidentified people familiar with the matter. New York-based CIT told investors that without the cash, it will probably file for bankruptcy, the Journal said.

CIT Chief Executive Officer Jeffrey Peek failed to convince regulators that fallout from a collapse would threaten the rest of the financial system. Officials at the Treasury, Federal Reserve and Federal Deposit Insurance Corp. have resisted putting additional taxpayer funds at risk, on top of $2.33 billion granted to CIT in December, to keep the lender afloat.

“While it is possible that CIT could receive rescue financing, we believe the prudent course for bondholders is to brace for bankruptcy,” CreditSights wrote.

CIT’s $2.1 billion, five-year bank line maturing in April was arranged by Bank of America Corp. and Citigroup Inc., and includes Merrill Lynch & Co. -- part of Bank of America -- UBS AG and Morgan Stanley, according to data compiled by Bloomberg.

http://www.bloomberg.com/apps/news?pid=20601087&sid=acxdfpkxaB5c

 

300,000 retailers rely on this company for lending, wow, they go under and who knows whats about to happen.


24 hour count down begins NOW!!!!

 

1) My town will be less cluttered with "redundant" merchants.
2) Many idle housewives will stop squandering their husbands' money on silly businesses that have no prayer of commercial success.
3) Corn and soybeans can be re-planted where these businesses once stood.

 

Most of those retailers are a sinking ship anyway, so saving CIT will not prolong the inevitable.

There is a reason CIT is going BK. Probably because they lent to crappy establishments & projects.

 

Give it a rest, Chicken Little.

 

LOL !