Daily outrage: Feds lose $2.3 billion in failed lender bailout
Staff report
November 3, 2009
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| (Getty Images) |
WHO: CIT Group
WHAT: As embattled CIT surrendered to bankruptcy after teetering on the brink of collapse for months, American taxpayers will likely take the full $2.3 billion loss for the unsuccessful TARP bailout attempt. CIT has been one of the nation’s biggest lenders to small and midsize businesses for 101 years, providing rollover financing to 2,000 vendors supplying merchandise to 300,000 stores, including 60 percent of the apparel industry.
WHY IT HAPPENED: CIT ran into trouble when rising costs to finance its operations outpaced the money it took in from providing credit lines. The government gave CIT $2.3 billion in last year’s rescue of banks and lenders. But it turned down a second CIT plea this summer for more funding.
WHAT’S COMING NEXT: The Chapter 11 bankruptcy protection prearranged with creditors will reduce CIT debt by about $10 billion and wipe out its stockholders. CIT’s chances of survival are considered iffy.
