lorddarley

Let CIT Fail: The Business Model Is Broken

You have raised a legitimate, and painful, point. The typical observation would be "Well, why don't you just go to another bank?"

The real life observation is that "other banks" are just sitting on free capital from the Treasury, and doing nothing with it. Like you, I have to deal with this inanity in real life.

I would recommend (and I am sure you are already doing this) that you aggresively pursue other lending sources. Good luck. You are doing business in a country that does not help small business.




On Jul 11 08:18 AM American Businessman wrote:

> CIT's failure will cripple many small to medium size businesses.
> I am one of the small (not mom and pop) businesses that CIT finances
> and has for the past 17 years. I understand that like many other
> financial institutions CIT has made poor investments/decisions. However
> financing me and thousands of other businesses like me was not one
> of them. We are responsible for about 100 jobs in the US, the same
> number in Mexico and another 200 or so worldwide.
> So multiple our employee numbers by the tens of thousands of CIT’s
> customers, who face the possibility of not being able to secure other
> financing or surviving an interim period, and CIT’s lack of support
> by the Federal Gov’t will be more devastating than any other bank/financial
> institutions failure so far.
>
> [e-mail] (not company's email)

Let CIT Fail: The Business Model Is Broken

Extending that 20 year line of credit was a "noblesse oblige" move by Goldman, which had underwriten the 2006 IPO when CIT spun off from TYCO. Goldman also helped CIT sell its construction finance business.

That Goldman facility is fully secured with investment grade assets which CIT owns. Repeat: it's fully secuured and subject to seizure by Goldman. Don't invest in CIT common just because Goldman made a secure loan to a customer.
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On Jul 10 09:47 PM shrike wrote:

> Don't schedule the funeral for CIT yet - Goldman Sachs extended a
> $3 billion credit line to them last June and they rarely make loans
> to deadbeats.