Dy’er Sez: Notice that CIT was ‘awarded’ almost 2 and a half billion dollars of tax payer money, plus a few billion here and there from various parts of the bailout plan, and they STILL went under. So much for the banker bailout – we’ll never see that money again, but at least the higher-ups got their bonuses.
Also note in the story that CIT was the primary lender not only for many small to medium sized businesses, but also for 60% of the US’s clothing industry. Considering that many small businesses are in deep trouble right now (and that slave-labor in Asia and South America is destroying the little bit of clothing manufacturing competition we have left in the states, and high taxes, insurance costs, and government leeway to companies who leave the country and take their tax break with them right here in the states) we can expect to see a lot of mom and pops shuttering their windows, more layoff in the manufacturing sector, and a lot more stuff with tags that show they were not made in the US. And all of this with the holiday season coming up.
Merry Xmas, from the government to all of us, eh?
Story from London Guardian:
US businesses at risk as lender CIT Group files for bankruptcy
Thousands of small and medium-sized businesses in the US face financial difficulties and could go out of business after lender CIT Group filed for bankruptcy protection last night.
Although the company will keep operating, it is unlikely to be able to make the same number of loans as before. CIT provides working capital to small firms such as shops, their suppliers and restaurants, many of whom are already struggling in the recession.
In one of the the biggest corporate failures in US history, CIT made its filing in the New York bankruptcy court yesterday, after a debt-exchange offer to bondholders failed. CIT said most of its bondholders have agreed a prepackaged reorganisation plan which will reduce total debt by $10bn (£6.1bn) while allowing the company to continue to do business.
The collapse is also bad news for US taxpayers, who stand to lose the $2.3bn provided last year to prop up the troubled lender.
Creditors will end up owning the company, while common and preferred shareholders – including the US government – will be wiped out by the plan. This is the government’s biggest loss yet through its Troubled Asset Relief Programme (Tarp).