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.

[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.

[Dubya-M-DeesWent2SyriaStupid!]

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.