CIT Update
From Bloomberg:
CIT Says U.S. Support Unlikely, Studies Options With Advisers
By Linda Shen
July 15 (Bloomberg) -- CIT Group Inc., the commercial lender running short of cash, said it probably won’t receive a federal bailout and is studying alternatives with advisers.
“There is no appreciable likelihood of additional government support being provided over the near term,” the New York-based company said today in a statement. CIT, once the biggest independent commercial lender, faces bankruptcy if no federal aid emerges, Standard & Poor’s said earlier this week.
The Treasury, Federal Reserve and Federal Deposit Insurance Corp. have been debating whether to risk more taxpayer funds, on top of the $2.33 billion granted to CIT in December, to keep the lender afloat. Regulators have been trying to gauge whether a bankruptcy would present a risk to the rest of the financial system. CIT’s supporters point to 1 million customers who may lose funding, including 300,000 retailers.
“It’s a killer,” said Sean Egan, president of Egan-Jones Ratings Co. “What’s next is that they’re going to have to scrape for capital to meet the next loan payment and it’s highly likely that they’re going to file for protection.”
CIT has battled cash shortages and faces $1 billion of bonds maturing next month. Messages to CIT spokesman Curt Ritter weren’t immediately returned.
The lender gained 1.9 percent to $1.64 today before trading was halted by the New York Stock Exchange. The stock, which dropped 64 percent this year, sold for more than $60 in February 2007.
Obama Briefed
CIT’s record includes eight straight quarterly losses totaling $3.4 billion after forays into subprime mortgages and student lending. Analysts are predicting losses the rest of this year, including $346 million when second-quarter results are reported on July 23, according to a survey by Bloomberg.
President Barack Obama was briefed on the status of CIT during his regular meeting with economic advisers this morning, administration spokesman Robert Gibbs said. He directed queries on CIT to the Treasury, where spokeswoman Meg Reilly didn’t respond to requests for comment before CIT’s statement.
CIT Says U.S. Support Unlikely, Studies Options With Advisers
By Linda Shen
July 15 (Bloomberg) -- CIT Group Inc., the commercial lender running short of cash, said it probably won’t receive a federal bailout and is studying alternatives with advisers.
“There is no appreciable likelihood of additional government support being provided over the near term,” the New York-based company said today in a statement. CIT, once the biggest independent commercial lender, faces bankruptcy if no federal aid emerges, Standard & Poor’s said earlier this week.
The Treasury, Federal Reserve and Federal Deposit Insurance Corp. have been debating whether to risk more taxpayer funds, on top of the $2.33 billion granted to CIT in December, to keep the lender afloat. Regulators have been trying to gauge whether a bankruptcy would present a risk to the rest of the financial system. CIT’s supporters point to 1 million customers who may lose funding, including 300,000 retailers.
“It’s a killer,” said Sean Egan, president of Egan-Jones Ratings Co. “What’s next is that they’re going to have to scrape for capital to meet the next loan payment and it’s highly likely that they’re going to file for protection.”
CIT has battled cash shortages and faces $1 billion of bonds maturing next month. Messages to CIT spokesman Curt Ritter weren’t immediately returned.
The lender gained 1.9 percent to $1.64 today before trading was halted by the New York Stock Exchange. The stock, which dropped 64 percent this year, sold for more than $60 in February 2007.
Obama Briefed
CIT’s record includes eight straight quarterly losses totaling $3.4 billion after forays into subprime mortgages and student lending. Analysts are predicting losses the rest of this year, including $346 million when second-quarter results are reported on July 23, according to a survey by Bloomberg.
President Barack Obama was briefed on the status of CIT during his regular meeting with economic advisers this morning, administration spokesman Robert Gibbs said. He directed queries on CIT to the Treasury, where spokeswoman Meg Reilly didn’t respond to requests for comment before CIT’s statement.
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