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CIT Group

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CIT Group, Inc. (CIT), founded in 1908, is a bank holding company headquartered in New York that is primarily known as a commercial lender with a focus on small and middle market businesses.[1]

Financial crisis and the bailout

Role in the crisis

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Bailouts

CIT received $2.33 billion in TARP funding in December 2008 through the Capital Purchase Program, when the U.S. Treasury used the $2.33 billion to purchase CIT's preferred stock and received CIT warrants.[2] When CIT filed for bankruptcy less than a year later, the Treasury Department added that it was unlikely to recover much, if any, of the bailout money.[3]

Attempt to secure additional bailouts

In the summer of 2009, when CIT appeared to be headed for bankruptcy, CIT approached the federal government to try to secure additional bailout funds, but it was unsuccessful.[4]

Conversion to bank holding company

Beginning in October 2008, CIT undertook a series of steps to become a bank holding company. It converted its industrial bank into a Utah state bank called CIT Bank and reclassified some of its debt in order to meet capital reserve requirements. Its application to become a bank holding company was approved on December 22, 2008.[2]

Bankruptcy

CIT filed for bankruptcy on November 2, 2009.[3]

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Earnings and bonuses

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Apparel industry

CIT "is the biggest so-called factoring firm -- a major source of financing for small to midsize businesses with sales of about $5 million to as much as $200 million or $300 million. A factoring firm buys receivables from apparel manufacturers and gives them cash immediately. That way, those companies in need of working capital don't have to wait for an average of 60 days to get paid from their retailer customers."[5]

"CIT provides financing for almost 2,000 companies that supply merchandise to more than 300,000 stores in the U.S. About 60 per cent of the apparel industry depends on CIT for financing."[6]

Political influence

Campaign contributions

Lobbying

Articles and resources

Related SourceWatch articles

References

  1. CIT Web site
  2. 2.0 2.1 Letter from Jeffrey M. Peek, CEO, CIT Group, Inc., to Neil M. Barofsky, SIGTARP, March 6, 2009.
  3. 3.0 3.1 Tiffany Kary & Dawn McCarty, "CIT Group Files Bankruptcy, Seeks to Reduce Debt," Bloomberg, November 2, 2009.
  4. Alistair Barr, "CIT shares slump as investors gird for bankruptcy," Marketwatch, July 16, 2009.
  5. Andria Cheng, "CIT's troubles send ripple effects across apparel industry," Marketwatch, July 14, 2009.
  6. "CIT woes worry U.S. retailers," CBC News, November 2, 2009.

External resources

External articles