Our lovely friends at AIC/AIG (and don’t forget Goldman Sachs) received upwards of $85 Billion dollars because they were too big to fail, yet the biggest lender to small and medium sized businesses, CIT Group who needs at least $2 Billion and upwards of a whopping $6 Billion (snark) is going to get thrown to the lions; and in this case, the lion is J.P. Morgan who just posted a $2.7 BILLION profit. CIT Group will become the 4th Largest Bankruptcy, and will more than likely take down numerous small and medium businesses with her while in bankruptcy.
What was I just saying about decimating the middle class and small businesses in this country? What was I saying about bringing America to her knees by destroying her economy so that the general population would be so demoralized they would allow a global government with the Pilgrims in charge?
Glenn Beck had an interview today with Charles Payne about just this subject; CIT Group and the really rich and powerful slamming the door on the rest of us so we will stay in our “place”.
Please keep in mind that I put this video together rather quickly because all of my “go to” videographers have not thought to make this one.
I am adding links to pertinent stories so that you can catch up.
July 16 (Bloomberg) — CIT Group Inc., the 101-year-old lender running short of cash, may need as much as $6 billion to avoid seeking bankruptcy protection after the U.S. wouldn’t give the firm another bailout, CreditSights Inc. analysts said.
“CIT indicated that it needs at least $2 billion of rescue financing in the next 24 hours or it would likely file,” said CreditSights analysts including Adam Steer. “We believe the figure is in the range of $4 to $6 billion plus, making outside capital sources shy away.” CIT’s debt tumbled, the shares plunged and the risk of default soared to a record today.
The lender is trying to raise $2 billion from debt holders and gave them 24 hours to put up the money, the Wall Street Journal reported today, citing unidentified people familiar with the matter. New York-based CIT told investors that without the cash, it will probably file for bankruptcy, the Journal said.
CIT Chief Executive Officer Jeffrey Peek failed to convince regulators that fallout from a collapse would threaten the rest of the financial system. Officials at the Treasury, Federal Reserve and Federal Deposit Insurance Corp. have resisted putting additional taxpayer funds at risk, on top of $2.33 billion granted to CIT in December, to keep the lender afloat.
“While it is possible that CIT could receive rescue financing, we believe the prudent course for bondholders is to brace for bankruptcy,” CreditSights wrote.
CIT’s $2.1 billion, five-year bank line maturing in April was arranged by Bank of America Corp. and Citigroup Inc., and includes Merrill Lynch & Co. — part of Bank of America — UBS AG and Morgan Stanley, according to data compiled by Bloomberg.
Peek, 62, joined CIT in 2003 after failing to land the top job at Merrill Lynch & Co. He pushed the lender into subprime mortgages and student loans to pump up growth.
What this really means:
Regulators were debating whether a CIT collapse would cause a cascade of failures among other businesses, the same reasoning used to justify multiple bailouts of American International Group Inc., once the world’s biggest insurer, and Citigroup, formerly the largest U.S. bank.
House Financial Services Committee Chairman Barney Frank said he’s “heard from a lot of people, including a lot of people involved in small business, that it would cause a serious problem” if CIT failed.
“I was struck by the number of people who were concerned and felt that if there was a total collapse it would have very negative consequences,” Frank, a Massachusetts Democrat, said in an interview yesterday.
Supporters of U.S. aid pointed to CIT’s 1 million customers who may lose funding, including 300,000 retailers. Tracy Mullin, chief executive of the National Retail Federation, said in a letter to Treasury’s Geithner that a CIT failure “cannot be allowed to happen at a time when retailers are already struggling to survive the national recession.”
And then there is THIS:
July 13 (Bloomberg) — CIT Group Inc., the century-old lender that hasn’t been able to persuade the government to back its debt sales, says its demise would put 760 manufacturing clients at risk of failure and “precipitate a crisis” for as many as 300,000 retailers.
A collapse would ripple across the “small and medium-sized businesses who rely on CIT to operate — to pay their vendors, ship goods to their customers and make their payroll,” the New York-based lender said in internal documents obtained by Bloomberg News that make the case for its importance to the U.S. economy. CIT spokesman Curt Ritter declined to comment on the documents.
CIT executives spoke with regulators during the past two days, according to a person familiar with the talks, after its bonds and shares tumbled on concern that the Federal Deposit Insurance Corp. won’t allow the lender into its bond-guarantee program created last year to unfreeze debt markets. CIT may default as soon as April, when a $2.1 billion credit line matures, according to Fitch Ratings.
“A CIT default would create liquidity issues for the corporate sector,” Ed Grebeck, chief executive officer of debt consulting firm Tempus Advisors in Stamford, Connecticut. “If CIT isn’t doing trade finance and lending, its customers will look to other banks for replacement and from what I’ve seen, they aren’t willing to step up.”
Bonds, Shares Fall
A failure of CIT, run by Chief Executive Officer Jeffrey Peek, would be the biggest bank collapse since regulators seized Washington Mutual Inc. in September. CIT reported $75.7 billion in assets and $68.2 billion in liabilities, including $3 billion in deposits, at the end of the first quarter.
CIT’s $656 million of 5.125 percent notes due in 2014 fell 4.5 cents on the dollar to 53 cents as of 9:21 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields 20 percent.
The stock declined 36 cents, or 23.5 percent, to $1.17 as of 9:36 a.m. in New York Stock Exchange composite trading. It dropped 46 cents, or 23 percent, last week.
The company, which reported more than $3 billion of losses in the past eight quarters, says it’s hired Skadden, Arps, Slate, Meagher & Flom LLP as an adviser.
New York-based Skadden is known for its work in mergers and acquisitions and bankruptcies. The firm represented BHP Billiton Ltd., the world’s largest mining company, in its $150 billion proposed acquisition of Rio Tinto, and advised Circuit City Stores Inc. in its bankruptcy.
“Skadden is one of the principal law firms representing CIT,” Ritter said in an e-mail on July 11. “They represent the firm on a wide variety of corporate matters. CIT will not comment on any specific aspect of their engagement.”
…and then there was Skadden, Arps, Slate, Meagher & Flom who just loves to come by and peruse the current post. So take a gander at the following links and find the connections to all sorts of other members of the banking cartel and the Pilgrims.
NNDB: Skadden, Arps