In looking at CIT's last few earnings calls, its Feb 2009 investor presentation (theme: challenges, opportunity, making progress), and press coverage, what is unclear is the breakout and amount of the non-performing loans.
The 2009 CIT backup documents showed "retail" at only 7% of the portfolio.
It's long been noted in franchisee sectors (see www.blumaumau.org, CIT discussion threads) that lenders' cash flow projections and SBA business projections have been/are contrived, are way too optimistic.
Of course, the same is true of a lot of big M&A deals, too. Chain restaurant M&A deals were in a 6 to 7 EV/EBITDA multiple range forever (1980 to 2005) but then spiked to 9-11 range in 2005-2007. The recent highs were, interestingly, the Dunkin Donuts deal, valued at 12.8 x (in 2005) and Krispy Kreme, at 21.4 x (in 2008). Both of these companies are franchisors, have had recent franchisee failure (3 multi-unit Dunkin franchisees in the last 45 days have filed for Chapter 11 reorganization. See here.)
What proportion of CIT's non-performing loans are chain franchisees? The publicly traded franchisors rarely refer to franchisee success metrics in their disclosures. This information could go a long way to highlighting the policy debate, e.g., CIT really is Main Street America and should be saved.
Disclosure: No stock positions whatsoever.