BoA is chomping at the bit to repay TARP, they have been waiting for the government to allow them to repay it for some time - Investment bankers who have spoken to BofA told The Post they are bracing for the bank to pay back some $20 billion. The Charlotte, NC-based bank received the money from the government's Troubled Asset Relief Program to help complete its shotgun merger with Merrill Lynch last December. Rumblings about the bank paying back TARP have been floating around for weeks, but are coming to a head as financial institutions prepare to hand out year-end bonuses. BofA's outgoing CEO Ken Lewis has chafed under the government's thumb. The bank wants to pay its employees freely without government scrutiny, one source noted. "We remain ready, willing and able to pay back TARP and we're only awaiting word from the government on when we can do that," a BofA spokesman told The Post. .....
BofA prepares for TARP payoff - NYP, 2009 October 31, by Kaja Whitehouse :Bank of America is pushing to break free from Uncle Sam's oversight, after borrowing some $45 billion in taxpayer money during the credit crisis.
Quite different from the picture that's regularly being painted. Now, Citigroup is in a bad bind, but that's quite a different story - CIT Group has absolutely no relationship with Citigroup.
CIT's prepackaged bankruptcy filing has been expected for days, if not weeks, the only question was how much the bondholders, particularly Carl Icahn, are going to get and on what terms. Hardly panic-worthy:
Icahn ends CIT battle - NYP, 2009 October 31, by Josh Kosman: CIT reached a deal with the activist investor that should allow it to file for bankruptcy on its terms, and emerge from bankruptcy in about 45 days. Icahn earlier this week waged a campaign to convince other CIT bondholders to vote against a company-proposed debt exchange and a pre-packaged bankruptcy plan. He argued that CIT's board needed to be ousted, and that paying off bondholders should be a high priority. A source close to CIT told The Post several days ago that Icahn really wanted "to get cut in on the financing." After a very public war, billionaire Carl Icahn has negotiated a truce with struggling lender CIT.
Timeline of preparation for filing, in reverse :
CIT Board of Directors Approves Proceeding with Prepackaged Plan of Reorganization with Overwhelming Support of Debtholders - November 01, 2009 15:39ET CIT Group Inc. (NYSE: CIT), a leading provider of financing to small businesses and middle market companies, today announced that, with the overwhelming support of its debtholders, the Board of Directors voted to proceed with the prepackaged plan of reorganization for CIT Group Inc. and a subsidiary that will restructure the Company’s debt and streamline its capital structure. Importantly, none of CIT’s operating subsidiaries, including CIT Bank, a Utah state bank, will be included in the filings. As a result, all operating entities are expected to continue normal operations during the pendency of the cases. .....
CIT Enters into Restructuring Plan Support Agreement with Carl Icahn and Obtains Incremental $1 Billion Committed Line of Credit from Icahn Capital LP - October 30, 2009 13:18ET CIT Group Inc. (NYSE: CIT), a leading provider of financing to small businesses and middle market companies, today announced that it has entered into an agreement with Carl Icahn to support its restructuring plan and secured an incremental $1 billion committed line of credit from Icahn Capital LP to provide supplemental liquidity for CIT as it pursues that plan. This new line of credit may be drawn by the Company on or prior to December 31, 2009, subject to definitive documentation and other customary conditions, and may be drawn as debtor-in-possession financing in the event of bankruptcy. Together with CIT’s $4.5 billion expansion facility, announced on October 28, 2009, and other available sources of liquidity, the line of credit will further enhance CIT’s liquidity during the execution of its restructuring plan and ensure its ability to serve its existing small business and middle market customers.
CIT Obtains Additional $4.5 Billion in Financing Through Expansion of Existing Secured Credit Facility - October 28, 2009 13:12ET CIT Group Inc. (NYSE: CIT), a leading provider of financing to small businesses and middle market companies, today announced that it has expanded its current $3 billion senior secured credit facility by an additional $4.5 billion. The new $4.5 billion tranche, which is being provided by a diverse group of lenders, including many of the Company’s bondholders, will be secured by substantially the same assets as the existing $3 billion tranche and any additional collateral that becomes available as a result of the Company’s refinancing of certain existing secured credit facilities. ..... The new $4.5 billion tranche matures in January 2012, and includes an option for the Company to extend all or a portion of the new tranche for an additional year.....
If there is a sell-off in the markets tomorrow, it should in no way be in response to CIT Group's bankruptcy restructuring which has been telegraphed for weeks. I wish GM and Chrysler did similar thing before President Bush used TARP funds to bail out UAW and give unions and government a huge stake in auto companies.
No doubt a selloff in the market will be due to both fundamental and technical reasons of the general market and the international market which sold off again.