CIT Files for Bankruptcy (received 2.3 billion in bailout money)

NYT ^

[Chet 99]

Update | 3:46 p.m. Three months ago, the CIT Group barely averted what it considered to be a ruinous bankruptcy filing that would likely have put the 101-year-old lender out of business.

On Sunday afternoon, the company filed for Chapter 11 — but under a so-called prepackaged bankruptcy plan that will enable it to emerge from court protection by the end of the year, under the control of its debtholders. (Read the filing after the jump.)

The filing, made in a Manhattan federal court, will still mean much pain for many parties, beginning with taxpayers. CIT received $2.3 billion in government aid last year, a bailout that came in the form of preferred stock. That will almost certainly be wiped out in the bankruptcy process, the first realized loss in the government’s rescue of the financial system.

[Nachum]

The list, ping

[TexasFreeper2009]

blew through 2.3 billion.. and STILL went out of business!

Thanks Government!

/sarc

[TexasFreeper2009]

for 2.3 billion, I could turn my entire downtown into a paradise!

Sigh.

[Parley Baer]

It will be interesting to see what the stock market will do with this news come Monday morning. Barry’s so called recovery is taking another big hit.

[kcvl]

“Too big to fail” /s

[WoofDog123]

wonder how open interest on nov and dec options is. gm gave a big sqeeze trade on same.

[OpusatFR]

This is a bad noise for small business.

Watch for a huge spike in small business bankruptcy.

[Don Corleone]

CIT received $2.3 billion in government aid

Wouldn't you just love to know where all that went?

Follow the Obama money.

[kbennkc]

I will file for bankruptcy for 5 million . Tell your congressman to let me help .

[nevergore]

Any impact to small business will be nominal....CIT hasn’t been lending for a while....

[OpusatFR]

This is a bad noise for small business.

Watch for a huge spike in small business bankruptcy.

[WellyP]

The market will go UP tomorrow as a result.

[WoofDog123]

CIT going bankrupt has been a known quantity for a while, or at least highly probable. the details are what has been being worked out.

[A.Hun]

This really sucks. Credit will be even harder to get for many wholesalers and other medium sized companies. They all rely on CIT style financing to maintain inventory.

GE will probably get the best customers, the rest get to go suck eggs. Local banks sure can’t help.

[trumandogz]

More evidence that the Commie-Socialist Bank & Wall Street Bailout was a disaster.

[TigerLikesRooster]

Ping!

[rbmillerjr]

I can only hope that the top executives at that company suffer great personal financial loss.

I’m sure they’re parachutes are packed, but I hope they feel alot of pain, after raising CC rates to 27 percent.

Immoral userers.

[Gritty]

Didn't GM also just show up at the door last week asking for another $10 billion or so? When does this insanity stop?

The taxpayers long ago ran out of money, so I suppose the only thing left to pawn is our pride - or maybe China will simply agree to take our entire country in trade? At least then somebody will get to drill our oil!

[parsifal]

http://www.nytimes.com/2009/11/01/business/economy/01citi.html?8dpc

Apparently the repeal of Glass Steagall and credit default swaps. This was preventable.

parsy, who is still learning

[lookout88]

This was a small business bank. This is not good news at all. Obamay let this one fail, but others not. This is really, really, bad.

[TwelveOfTwenty]

Check out the futures at Bloomberg.com here. I'm not familiar with how futures work, so I'll ask if this is as bad as I think it is?

[Indy Pendance]

Anyone hear about Barney Franks proposal to give the executive branch carte blanche to bailout whoever is ‘too big to fail’ without going through the legislature?

[willieroe]

I’m sure they’re parachutes are packed, but I hope they feel alot of pain, after raising CC rates to 27 percent.

CIT and Citibank are two completely separate entities. No relationship exists between them.

[Lorianne]

It stops when we say it stops and not until then.
Apparently, we’re not finished bending over yet.

[Gondring]

I’m hoping BoA has to sell shares and will pay back bailout

[WellyP]

My error! No effect on the market tomorrow. It has always been factored in!

[TurtleUp]

The filing, made in a Manhattan federal court, will still mean much pain for many parties, beginning with taxpayers. CIT received $2.3 billion in government aid last year, a bailout that came in the form of preferred stock. That will almost certainly be wiped out in the bankruptcy process, the first realized loss in the government’s rescue of the financial system.

I expect a lot of other TARP gifts from taxpayers to big money political donors to disappear the same way. This may be the first loss "realized" on the books, but sensible people realized a year ago that most of the money flushed down the TARP toilet was gone.

[spokeshave]

Small businesses...generating approx 70% of job growth in a normal (non-0bambi) economy and major CIT clients will take another hit.

Expect an up-tick in unemployment figures.

[PAR35]

It didn’t fail. They just wiped out the liability to the taxpayers. Almost everyone else will come out whole.

[NoObamaFightForConservatives]

Is this Citi?

[Recovering Ex-hippie]

Yeah, that worked out soooo well!
SOB’s ~!

[Lurking in Kansas]

How's the bail-out working for ya, CIT Group?? The Zero sure saved ya .. didn't he?

Just the first of many...

[RowdyFFC]

Ka ching...the people s*****d out of $2.3 billion, the bankers made out like bandits...and the Obama/Geithner team should go to jail for this.

And don’t say Bush...this was the doing of Bernanke/Geithner very conveniently in an election year for the Obama team.

[TwelveOfTwenty]

Check out the futures at Bloomberg.com here. I'm not familiar with how futures work, so I'll ask if this is as bad as I think it is?

The futures are unchanged from when I posted earlier, so I guess they're just not tracking them yet. False alarm!

[editor-surveyor]

The weather vane doth point in the direction the wind blows.

[editor-surveyor]

"Watch for a huge spike in small business bankruptcy."

The Marxist Make-over of America is on schedule!

[editor-surveyor]

Is this what you meant?

[Ghost of Philip Marlowe]

Yeah, but just think how much worse it would have been if they had not received any bailout money.

They may have gone bankrupt or something.

This is much better than expected.

[John W]

You forgot the sarcasm tag.

Please, tell me you forgot the sarcasm tag.

[EGPWS]

The filing, made in a Manhattan federal court, will still mean much pain for many parties, beginning with taxpayers. CIT received $2.3 billion in government aid last year, a bailout that came in the form of preferred stock. That will almost certainly be wiped out in the bankruptcy process, the first realized loss in the government’s rescue of the financial system.

Obama is thumbs up and giddy in the Oval Office.

[GnuHere]

What a waste. They coulda bailed me out for 1/1000th of that, but I guess it wouldn’t help if the dollar is soon worthless anyway...

[John W]

I only say that because, I’m no longer sure of anyone anywhere, including here.

[optiguy]

Anyone see Giethner this morning on Meet the Press? When asked if he would like to see AIG prosper after they pay back the TARP money, he said he didn’t care if they do or not. I thought we bailed them out because they were too big to fail.

[javachip]

Almost everyone else will come out whole.

No they won't. Common stockholders will be wiped out, the gov't and private preferred stock holders will be wiped out, debt holders will take a $10 billion loss on nearly $65 billion of debt.

[hsmomx3]

I was just thinking that.

[TopQuark]

"raising CC rates to 27 percent."

Oh, you are one of those people that knows what gouging is. Couly you please tell us?

In the Middle ages, most loans were very short-term and carried the interest of 100-120% (in Germany, for instance). Was that gouging or usury?

[EGPWS]

Yeah, but just think how much worse it would have been if they had not received any bailout money.

They may have gone bankrupt or something.

This is much better than expected.

You bet!

Look at the bright side, think of all the government employed printing press operators jobs that were saved or created.

And they already have a premium health care plan to boot!

[ProudFossil]

The DOW futures are already heading south as of 6:00 pm ET.

[unique]

Lending to this entity at that time represents malfeasance, at best. Using taxpayer funds seems criminal to me.

Someone needs to stop tarp or stimulus funds from going to entities that more than likely will file BK within a few months.

We are so screwed.