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PIMCO Cuts Ties With CIT Steering Committee, Sells CIT Holdings
In a repeat of its actions with the Lehman ad hoc committee, PIMCO has now decided to abdicate its role on the CIT steering committee, and sell off its associated holdings. Several questions emerge: the broad public is already aware of the CDS windfall that Goldman stands to reap if CIT ultimately does experience an "event of default" which at this point is a merely formality. So, in a parallel line of thought, just how much is PIMCO hedged to its CIT exposure? And if the answer is "much to quite much", will the combined interests of Goldman and PIMCO to effectively let the company sink be enough to warrant what may otherwise not have been a foregone conclusion on the viability of the company. Furthermore, while part of the Steering committee, how much restricted data was PIMCO privy to? One imagines CIT is a veritable treasure trove full of insights into the lending practices by its millions of customers. Obviously while PIMCO was a committee member, it was unable to trade on this data (right SEC?). Now that it is officially separate from this restriction, an appropriate question would be just what are the limitations in place for preventing it from taking advantage of its huge capital base and all the confidential information it may have gleaned?
From the WSJ:
Bond giant Pacific Investment Management Company has sold its position in a recent emergency loan for CIT Group Inc. as the century-old lender battles to stave off bankruptcy, according to people familiar with the matter.
The move comes as CIT struggles to end months of uncertainty about
its future. Pimco was one of six members of a steering committee of
CIT's largest bondholders that put in place $3 billion of financing for
the company at the end of July.
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My question is did they sell the position to another investor for 0.30 or to the TALF for $1.00?
Rhetorical question, right?
this brings up a thought concerning insider information. in a knowledge capital emerging society how is a SEC going to be effective if it cannot be productive with the knowledge it currently has?
A CDS sold to Goldman is basically a hit contract these days.
Not to worry - Little Bear Investments has got CIT's back.
I mean... you know they were keeping CIT alive to help more of the lemmings reach the cliff before they threw it overboard.
GS has already gone short. There is no bottom in sight now for none is needed.
Look out below.
cougar
How I wish I could go shopping at CIT.... I join in wondering exactly how much shopping PIMCO was able to accomplish while inside.
Kill CIT, kill small business. Just get it over with already.
Theyll kill CIT relatively quickly, but their design is for a nice slow procracted death of small business. JPM will takeover the space, introduce higher rates and let the process work itself out naturally.
PIMCO pulled out of the creditor negotiations with
the autos too. Looks bad for the taxpayer here!
Who owns the bad side of the CIT CDS contracts, is my question. I have this horrible fear that when you turn those contracts over, you see Timmy's smiling face, not personally but representing the American taxpayer, who once again needs to head over to that much-used 55 gallon drum of KY and grease up for the event.
I suspect that this may well be the, or part of the quid from Christine Lagarde in return for the inclusion of SocGen into the AIG 100%er club.
Especially as to GS and those who hold the winning side of CIT CDSs in notional amounts far in excess of their actual exposure.
guys, girls ....relax
Little Bear Investments is way on top of this