The impact of CIT's bankruptcy
CIT group filed for the fifth-largest bankruptcy in U.S. history, which will affect a whole lot to small- and mid-sized companies. Mitchell Hartman reports.
The logo to the CIT Group headquarters is displayed in New York City. (Mario Tama/Getty Images)
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Bill Radke: We wake up this morning to the 5th-biggest bankruptcy in U.S. history. It's CIT Group -- a century-old company that may not be as well-known as Washington Mutual or General Motors. But it matters a whole lot to small- and mid-sized companies that use CIT as a primary source of cash to fund their operations. Marketplace's Mitchell Hartman reports.
Mitchell Hartman: CIT is the primary lender to hundreds of thousands of manufacturers and retailers -- from Eddie Bauer to Dunkin' Donuts. So its Chapter 11 bankruptcy filing means a lot as the economy is coming out of recession and heading into the holiday shopping season. Many of these businesses are already struggling to find banks that will lend to them or extend lines of credit.
Bob Coleman publishes The Coleman Report on small-business lending. He says CIT's problems with subprime mortgages have already caused the bank to cut way back.
BOB COLEMAN: They are down over 80 percent in 2009 versus 2008. And that translates all across the tens of thousands of small businesses that they service.
CIT's goal, with the blessing of investor and bondholder Carl Icahn, is to emerge from bankruptcy by the end of December. And to keep its business lending going during that time.
The biggest losers are stockholders and the U.S. Treasury, which pumped $2.3 billion in bank bailout funds into CIT. That money is probably lost.
I'm Mitchell Hartman for Marketplace.
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From MI, 11/02/2009
The commentator said that $2.3 billion is not significant compared with total $700 billiion in the program. I do not know what he meant, but I got an impression that he ignored the fact that this is taxpyers' money, how hard people worked to earn the tax money, and $2.3 billion would improve welfare of many people. He may be one of the people who looked at only the numbers, ignored the reality, and caused the financial turmoil. He is not qualified to be a commentator of NPR. In addition, Market Place recently seems in line with CNBC. What is wrong?
From NC, 11/02/2009
How does any company file for bankruptcy on Sunday? It's not a business day anywhere. Are any govt. offices or courts open? Is there something else going on here?
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