Game Over CIT
CIT Announces That Discussions with Government Agencies Have Ceased
NEW YORK--(BUSINESS WIRE)--CIT Group Inc. (NYSE: CIT), a leading provider of financing to small businesses and middle market companies, today announced that it has been advised that there is no appreciable likelihood of additional government support being provided over the near term.
The Company’s Board of Directors and management, in consultation with its advisors, are evaluating alternatives.
Finally one not too big to fail (not surprisingly, the one who services Main Street). How many billion in CDS was Goldman long CIT? Due to the lack of a 80% unionized workforce, Obama will not hold a press conference on how Steve Rattner will get the company out of chapter in 30-45 days.
And here is the summary assessment compliments of Egan-Jones:
Synopsis: No help - " no appreciable likelihood " of US support near term is a massive blow to all CIT stakeholders. Unfortunately, given CIT's distressed state, there are no other likely capital providers. Calls might be made to large sophisticated investors such as Buffett but success is unlikely. Liquidity will be pressed and we would not be surprised by a filing in the near future. CIT reported weak March 2009 results with operating income sliding from a $2M loss last year to a $453M loss this year. Interest income fell by $174M and provisions rose by a stunning $288M. Over the past two years CIT's shares have fallen from $60 to merely $1.53 providing a market cap of just $637M vs. $60B of debt. The short term debt will suffer along with all other debt.
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on Wed, 07/15/2009 - 17:32
#7515
OK, Tyler, can you pls talk to some lawyer friends and try to get them to put together some protest petition--you have a great question about GS and CDS's on CIT, but, how about taking notice that CIT was not a federal reserve member bank and the this failure throws all business (JUST LIKE THE DECISION NOT TO GIVE LEHMAN A 6BILLION BRIDGELOAN, AND THE BLOCKING OF THEIR REQUEST TO BECOME A BANK HOLDING COMPANY), again, into the hands of the monopoly monster ( i know people call it oligarchy, but basically, the fed is a monopoly that has oligarchy bank affiliates). THIS IS HUGE...AND THE PRIVATELY HELD FEDERAL RESERVE, CORP'S CHARTER TO PRINT MONEY AND SCREW THE US TAXPAYER EVERYWHICH WAY NEEDS REVOKING.
on Wed, 07/15/2009 - 17:40
#7527
Here! Here! Agrotera! and then there is Duopololy...The Government and GS!
on Wed, 07/15/2009 - 20:57
#7617
Hi Shaza! Good God! Monopoly, Oligopoly, Duopoly, all with the blessing of all of our elected puppets of this untrustworthy trust!
on Wed, 07/15/2009 - 17:33
#7516
This says "screw you Main Street"
on Wed, 07/15/2009 - 17:33
#7517
it is about time they let someone hang for their errors
on Wed, 07/15/2009 - 18:48
#7553
They are 'getting hung' because they are not a Fed member bank, not because they are following good policy. Just ask lehman.
on Wed, 07/15/2009 - 17:33
#7518
I seriously have an interview with CIT tomorrow... wtf....
Why did this have to be the one time the gov. didn't play superhero?
on Wed, 07/15/2009 - 17:35
#7520
I am sorry about that. Seriously, that stinks.
on Wed, 07/15/2009 - 17:36
#7522
That sucks, anon. No kidding.
on Wed, 07/15/2009 - 23:17
#7687
Think of it as an opportunity. Since you know it's extremely unlikely to work out anyway -- who would want to work for a bankrupt bank, and what bankrupt bank would want to hire? -- you can be a total ass in the interview and get away with it.
Bring a hidden video camera, go way over the top in the interview, and then post it on YouTube and link it for us.
I tripe-dog-dare ya
on Thu, 07/16/2009 - 06:23
#7732
Too bad about the interview, CIT won't be able to fog a mirror in the morning.
GS was the first to know..like Humpty Dumpty , CIT was pushed..now you can pay all the King's horses and all his men and it still won't get it back again..you bet GS had H-D's life insurance LARGE...the answer to the second part about not playing superhero is that he had to die so GS could collect.
on Wed, 07/15/2009 - 17:34
#7519
But, but ... the markets are up! Green shoots! Everything's peachy!
on Wed, 07/15/2009 - 17:37
#7525
There is a sssssnake in those green shoots, said the Taipan!
on Wed, 07/15/2009 - 18:06
#7538
it seems like the snake is losing it's invisibility cloak!!!
on Thu, 07/16/2009 - 07:41
#7748
Heres the list of snakes that will benefit from CIT collapse.
CITCPvt1IXIndustryMarket Cap:637.79M17.48BN/A5.19B224.36MEmployees:4,830309,000N/A18,920841Qtrly Rev Growth (yoy):-77.20%116.70%N/A-16.60%16.30%Revenue (ttm):1.44B27.49B26.74B19.59B105.02MGross Margin (ttm):100.00%N/AN/A33.06%76.98%EBITDA (ttm):N/AN/AN/AN/A38.31MOper Margins (ttm):-64.93%-107.46%N/A9.77%21.28%Net Income (ttm):-841.80M-29.45BN/A109.22MN/AEPS (ttm):-9.757-4.717N/A1.25N/AP/E (ttm):N/AN/AN/A23.2010.45PEG (5 yr expected):N/AN/AN/AN/A0.91P/S (ttm):0.440.64N/A0.541.10C = Citigroup, Inc.Pvt1 = GE Commercial Finance (privately held)IX = ORIX Corp.Industry = Credit Services1 = As of 2008 INVESTMENT BANKING COMPANIES RANKED BY INVESTMENT BANKING SALES CompanySymbolPriceChangeMarket CapP/ECitigroup Global Markets Inc.Private - View ProfileJPMorgan Chase & Co.JPM36.260.00%136.31B32.15Goldman Sachs Group Inc.GS155.260.00%78.16B34.70Morgan StanleyMS28.800.00%31.16B19.88Merrill Lynch & Co., Inc.Private - View ProfileLEHMQ. PKN/AN/AN/AN/ABanc of America Securities LLCPrivate - View ProfileUBS Investment BankPrivate - View ProfileDeutsche Bank AGDB68.470.00%42.31BN/A
Batter up top of the first and bases are loaded.
on Wed, 07/15/2009 - 17:37
#7523
@ agrotera
CIT became a bank holding company in 1Q09. In so doing, it came under the auspices of the Fed.
on Wed, 07/15/2009 - 17:45
#7529
I checked with the regulator in Utah and they said the bank wasn't a fed member bank, but the holding co was under the supervision of the fed. So, the holding co. got bank holding status, and that is regulatory, not bank affiliation...am i confused here? Thank you for your help Anonymous!
on Wed, 07/15/2009 - 17:37
#7524
I'm sure the pundits on TV will spin this as the Government finally "getting tough" and "doing what all those moral hazard people have been clamoring for", bullshit like that, ....
But once the Government decided Companies X, Y, and Z get to live, every time they let Company A, B, and C die they've only reinforced the reward they gave to X, Y, Z.
And then we are all S.O.L.
on Thu, 07/16/2009 - 03:40
#7720
Sounds kind of like Italy circa 1933
on Wed, 07/15/2009 - 17:38
#7526
My gut says the markets reacting so strongly emboldened the government to let CIT go under: markets acting better so they can handle the failure. Time will tell if they really can or not.
on Wed, 07/15/2009 - 17:41
#7528
now we know why the vix was where it was and they kep the computers on buy all day to gun the shorts and gett the worng footed options....
on Wed, 07/15/2009 - 17:46
#7530
This is so not right. This should really F things up good.
on Wed, 07/15/2009 - 17:52
#7532
they want people to go back into bond market cos they can't afford to
on Thu, 07/16/2009 - 03:42
#7722
This allows mass consolidation of the banking and credit systems under the established criminal syndicate ('oligarchy'). Now we see that the 'too-big-to-fail's' get trillions while the 'too-small-to-save's' will be thrown to the wolves.
on Wed, 07/15/2009 - 17:59
#7534
A CIT bankruptcy is going to have repercussions, and make no mistake, these repercussions *have not been adequately modeled* by the Feds. Even when given months of notice and time to dissect and study the problem, the sub-prime default wave was always "contained" and even the effects of the Lehman bankruptcy were totally understimated.
I have no faith that any of these chumps have any idea what the effects of a CIT bankruptcy would be to the ridiculously fragile, gossamer glass model of an economy we have right now. I hope this isn't one of those credit crunch aftershocks Rosie's always on about.
on Wed, 07/15/2009 - 18:05
#7537
Hey FisherBlack, i think the Lehman bankruptcy was totally estimated ( like the choreography of a dark ballet ) to be a win for so many affiliates and subsidiaries of GS, and MS who were betting on the demise of Lehman with CDS's and shorting the stock--and the best part of the estimate was to have the systemically sacred AIG ready and willing to open the front doors to take in UStaxpayer$$$'s to pass out the back door to pay 100cents on the dollar to counterparties even though the Lehman bet bankrupt the company--how genius. Nice that Eliot Spitzer is starting to smell out this crime.
on Wed, 07/15/2009 - 20:16
#7588
No doubt there was a whole lot of that going on. I still don't have a clear idea of what the explanation is for Lloyd Blankfein's presence at the Treasury meetings to decide the fate of Lehman.
on Thu, 07/16/2009 - 03:43
#7723
Two words: Criminal Activity.
on Thu, 07/16/2009 - 09:12
#7785
For what it's worth, CreditSights had called the problems at CIT pretty early on (sorry no link). They were quoted in WSJ yesterday as saying that the impact to mainstreet may not be as severe as you might think. CIT lending contributes to less than 1% of total lending to manufacturing and retail business in the US.
Here's the WSJ story: http://blogs.wsj.com/marketbeat/2009/07/14/does-cit-pose-systemic-risk-n...
on Wed, 07/15/2009 - 18:14
#7541
Why would they bail-out their competition? Now the oligarchy can "ride to the rescue" and provide all those small businesses with financing. This helps the crooks consolidate power.
on Wed, 07/15/2009 - 18:20
#7546
They are just shooting another hostage. The government needs scared citizens to approve a new stimulus package and they also need scared institutionals running into bonds. If we have green shoots/recovery, then we can't really ask for more money, now can we?
on Wed, 07/15/2009 - 18:32
#7549
CIT going out of business helps Main Street Businesses. If ABC Roofing Company has a 500k loan with CIT - it won't anymore. Wealth transfer to small businesses.
Think how many small businesses are having parties tonight because they won't have to pay their loans back. Yea, the liability (loan) may end up in a secondary market somewhere during / after bankruptcy, but once it goes that far, the pressure to pay is so little. Bye bye liabilities says the small business owner...Yea!!!!
on Wed, 07/15/2009 - 18:42
#7552
Don't have it in me to do anything more than say: You're retarded.
on Wed, 07/15/2009 - 19:10
#7560
Well put
on Wed, 07/15/2009 - 19:33
#7575
...do shills multiply like roaches? they come in all shapes and angles, yuck.
on Thu, 07/16/2009 - 02:19
#7715
Roaches in view always mulltiply when someone is about to turn the lights off.
on Wed, 07/15/2009 - 21:15
#7635
He probably works at Goldman to think that way...
on Thu, 07/16/2009 - 06:27
#7733
so wamu goes and your mortgage disappears? get a new teacher.
on Thu, 07/16/2009 - 08:03
#7758
this is so fucking stupid it defies belief
on Wed, 07/15/2009 - 18:48
#7554
Mr. Bizzle - you are retarded. I owned and ran a small regional manufacturing company for ten years. When one of my creditors when bankrupt, more often than not, there was nobody to pay after a period of time - everything wafted into the ether. In the economic environment we are in now, that is most likely the scenario to happen.
on Wed, 07/15/2009 - 21:12
#7629
Sorry for the delay... just spent a few hours letting the million or so New Century/Ameriquest/NovaStar/Accredited borrowers know that they don't need to wait for the next Obama mortgage plan, that they can simply stop paying now. Thanks for the heads up!
on Wed, 07/15/2009 - 18:51
#7555
The question is, how much CIT paper was held in Money Markets and Institutional Funds last September - and how much is at present?
Too bad CIT isn't owned by a parent company that runs various media outlets shilling a certain Administration everytime they ask/tell them they're coming on to read their talking points.
on Wed, 07/15/2009 - 19:03
#7558
the recession is over! meep meep!
-dk
on Wed, 07/15/2009 - 19:07
#7559
Is this a new world order...
buy now and don't pay anything
on Wed, 07/15/2009 - 19:17
#7563
I have to ask... why should people need to borrow money anyway?
Oh... it's because money is debt. Money has to be created into existence, and what's worse, it's always in the form of a loan with interest. There is no possible way to increase economic productivity in such a way that allows a loan with interest without screwing someone else out and the system requires the constant inflation of the debt supply to keep the cogs turning. And, what is money backed by, oh, it's DEBT. Government debt mostly.
it's actually interest rates which CAUSE inflation, not the absence of interest rates which cause inflation.
on Wed, 07/15/2009 - 19:26
#7569
Tick Tick Tick...
on Wed, 07/15/2009 - 19:31
#7572
KABOOM!
on Wed, 07/15/2009 - 20:21
#7591
That's gonna leave a mark
on Wed, 07/15/2009 - 20:28
#7596
Now if only AIG would share the same fate.
on Wed, 07/15/2009 - 21:03
#7622
I think it is simple. The plate for the potential CIT suitor was not golden enough, so they decided to play the chicken game & regulators (banking) decided to go with "or ELSE" option.
on Wed, 07/15/2009 - 21:04
#7624
Until I see a bankruptcy petition filed I am still assuming they'll get bailed out.
on Wed, 07/15/2009 - 21:12
#7630
TD, my man, I knew you spent the bulk of your vacation in Ireland. Jonathan Swift type sarcasm and irony is strong in you. Hope the Micks treated you right, (and my grandma didn't hit on you)
on Wed, 07/15/2009 - 21:31
#7644
Its sad to see that CIT is being allowed to fail. Of course, don't we need to notice that they serve Small and Medium corp instead of the large companies? No big institution probably has exposure to CIT - so let them be F*ed!
All CIT had to do a few years back was to have some exposure to GS - they will be saved today.
on Wed, 07/15/2009 - 21:49
#7648
if CIT was getting bailout money, then GS would be long CDS
on Thu, 07/16/2009 - 06:32
#7736
CDS is the cost of insurance..goes up with danger, like yield inverse to bond price.
on Wed, 07/15/2009 - 21:58
#7654
Any one willing to speculate what impact the demises of CIT will have on all the CRE that small bzns rent?
on Wed, 07/15/2009 - 22:24
#7670
What a sad collection of useless and un-witty comments.
on Wed, 07/15/2009 - 22:26
#7672
We shoulld all strive to make our comments as useful and witty as yours.
on Wed, 07/15/2009 - 22:39
#7677
One thought is that CIT has enough capital and a high rate of loan runoff to ride out the next bond maturity, but they are looking to pressure the Fed now for a handout of cheap debt to help take advantage of the yield curve. Big game of chicken...right now they are losing.
on Wed, 07/15/2009 - 23:25
#7689
CIT necessary? No. Nor any other American banks. In most countries, people finance themselves or via friends and family. Heck people dont even use banks. They keep money at home. If they need to borrow, they go to the swiss- proper bankers. The joke is, the US banksters could go out of business, and Americans would be much better off.
on Thu, 07/16/2009 - 00:19
#7696
This is just one more huge hit to small business. Credit cards issued to small businesses are getting their limits slashed and rates hiked with Advanta, holding a million small business cards, going out altogether. Then you have alt-A mortgages, specifically Option ARMs, which are targeted at small businesses going sour. You also have the planned tax hikes and other government policies. On top of that are these terrible economic conditions, community bank failures, and finally this.
Seems a lot like death by a thousand cuts.
on Thu, 07/16/2009 - 00:42
#7701
Tyler you guys should look into this and see if you could get the exact clip of Maria B. and match up the time with the huge volume spikes at 3:02pm ET....Maria comes on the air from the floor of the exchange and reads her cue cards in such an inspiring way that ALMOST had me wanting to punt on CIT....Having seen this screw job before I just watched the volume spike (14% of the daily vol was done in the ten minutes after her enthusiasm) as the price had already jumped from 1.57 to 1.65 in a matter of seconds...Quite ironic how it was halted out of nowhere at 3:30pm ET to keep the punters/day traders/quants screwed into this BK....
$COSTAverageMAN
on Thu, 07/16/2009 - 00:42
#7702
How much will the Fed pay GS or JPM next month to take CIT out of CH. 11 and how large will the backstop be?
on Thu, 07/16/2009 - 04:02
#7724
Regarding CIT here is the money quote from today's Financial Times.
On Wednesday night the US Treasury said that it had assembled a “powerful set of innovative financing mechanisms” to restart the flow of credit.
However, it added: “Even during periods of financial stress, we believe that there is a very high threshold for exceptional government assistance to individual companies.”
In other words, if you are not a major union, GS, JPM or backed by an alumni of GS then you have nothing comming.
http://www.ft.com/cms/s/0/1cefff8c-7198-11de-a821-00144feabdc0.html
on Thu, 07/16/2009 - 10:33
#7823
Well, there's something coming for ya alright, but it's a freight train.
on Thu, 07/16/2009 - 11:55
#7876
It is vry interesting how the government is going about dealing with moral hazard. Private companies who take on excessive risk to the level that they become "systemic" are bailed out (AIG). Private companies who do not do so are deemed small enough to fail. This has some serious implications. If you are worried about going bankrupt, just amp up risk, sell naked insurance all day long to as many counterparties as possible. If it works out the shareholder (ie management wins), if it fails the government is there as a backstup and will still pay out your bonuses. Why wouldn't GS run maximum VaR levels under these scenarios? Why wouldn't anybody?
on Thu, 07/16/2009 - 13:34
#7924
More on CIT bankruptcy from CreditSights courtesy of bloomberg tv
http://www.bloomberg.com/avp/avp.htm?N=av&T=Steer%20Says%20Bankruptcy%20...
on Thu, 07/16/2009 - 14:05
#7947
anybody buy a CIT lotto ticket? I'm in at $.37, but not much...
Had a nice sitdown dinner earlier with a bottle of wine included, but not so much anymore.
on Fri, 07/17/2009 - 22:14
#9184
I have several college educated American friends. One is actually a PhD. They actually asked if Countrywide goes bust, would they have to continue paying the mortgage!!