Daily outrage: Taxpayers stuck: U.S. could lose $2.3 billion if CIT goes bankrupt

WHAT: The Treasury Department bought $2.3 billion in preferred shares of embattled commercial lender CIT to save it at the height of the financial crisis. Now CIT is in a last-ditch struggle to prevent bankruptcy by offering a debt exchange that would virtually wipe out stockholders — including U.S. taxpayers.

WHO WINS: Goldman Sachs would be owed at least $1 billion for a loan it made to CIT about five months before the bailout. The loan contract specifies that if CIT defaults or goes bankrupt, it is “required to pay a make-whole amount” of $1 billion, the Financial Times reported. Goldman Sachs also holds credit insurance that would be paid.

WHY IT’S A BAD IDEA: This would be the biggest taxpayer loss yet from the federal bank bailouts.

Just Posted

School district leaders want to keep cops off campus

SFUSD renegotiating agreement with police on handling of incidents involving students

Large fire displaces residents in Castro District

A large fire in San Francisco’s Castro District Saturday morning injured two… Continue reading

CCSF faces further class cuts to stem $13 million deficit

College weighing elimination of some programs including culinary arts, journalism

Confusion over planning codes nearly kills Sunset District restaurant project

A San Francisco couple that dreamed of serving the community they live… Continue reading

Jury awards Planned Parenthood nearly $2.3 million in civil suit against anti-abortion activists

A federal jury in San Francisco on Friday awarded Planned Parenthood Federation… Continue reading

Most Read