[Cooter]

Small business loans can be for several purposes, including real estate, inventory, capital equipment, etc. IMO, CIT's problems are more due to the general decline of economic activity. Small businesses are seeing profits dry up or disappear, and can't pay back their loans.

I think this precedes (or parallels) the commercial real estate collapse, which is effected by businesses folding and therefore not paying rent to the (over)developed shopping malls, strip malls, business parks, office buildings, etc. I don't think those larger real estate developments were CITs bread and butter, but I could be wrong.

[drangundsturm]

Small business loans can be for several purposes, including real estate, inventory, capital equipment, etc. IMO, CIT's problems are more due to the general decline of economic activity. Small businesses are seeing profits dry up or disappear, and can't pay back their loans.

True enough but as you point out business loan failures are a precursor to commercial real estate losing tenants and then cascading into failure. CIT could be the first shoe to drop in this second big spike down. A whole different kind of bank will fail, more trillions in bailouts, unemployment accelerating back to levels seen in january.