Old Trader

Second U.S. 'Bank-for-Businesses' Faces Bankruptcy

Jeff,

You've been hoisted on your own petard.

"because a huge portion of its assets/collateral are SHARES it has taken from these companies which are now only worth a FRACTION of their former value."

I've seen/read/heard nothing that would suggest that CIT's assets are comprised of shares in the companies they have a relationship with. You're comparing apples and oranges, here.



On Aug 06 11:03 AM Jeff Nielson wrote:

> Claiming this is not a "bank" is simply semantics. If anything, the
> differences between the business model of American Capital and a
> traditional bank makes this company MORE vulnerable to bankruptcy
> - because a huge portion of its assets/collateral are SHARES it has
> taken from these companies which are now only worth a FRACTION of
> their former value.
>
> At least a traditional banks would have its loans secured by these
> companies assets.
>
> BTW, it was Reuters which chose to describe American Capital as being
> "in default" on its credit agreement.

Second U.S. 'Bank-for-Businesses' Faces Bankruptcy

Agree that ACAS is not a bank; it is a BDC, a horse of entirely a different color, and its failure won't have anywhere the impact that a CIT bk would have.

Five Struggling Dividend Stocks I'm Still Bullish On

Re: ACAS. I think the game has changed for the BDCs for the next few years because the tight credit markets have put paid to traditional exit strategies for portfolio holdings. They'll have to focus on instituting genuine operating improvements in their companies, and concentrate on cash flow/profits.

just sayin'