CIT is left to twist in the wind; the administration has rejected any bailout or guarantee of debt issuance through the FDIC. As I covered Monday, CIT was asking for the same FDIC backstop for its debt that GE receives.
The problem for CIT is that GE’s CEO, Jeffery Immelt, gives a lot of money to Oh! Bama and serves as an advisor. NBC is the next best thing to a private propaganda machine for the White House. GE is the biggest user of FDIC backing on issued credit. GE accounts for over 20% of all debt guaranteed by the FDIC!
Private sources may come to the rescue of CIT. CIT dropped 75% this morning. You can buy a share for $0.41; the shares have traded as high as $13 in the last 52 weeks. This may be more dangerous than slots at the casino. Do you feel lucky?
CIT is learning a hard lesson, what I call a John Galt moment. Executives are willing to let government go unchecked, and seek to gain an advantage over competition. As the government becomes larger and larger, only the favored are bestowed with gifts. This is what we have become. A nation state, run by a bunch of gangsters. Bailouts for the politically connected. Exclusions from laws for some while the rest of the “unwashed” toil to pay the taxes.
A few questions:
- Do members of congress live under the laws they pass? No. They exempt themselves. You cannot sue a congressman for sex discrimination in the office.
- Do congressmen collect social security? No. They have a special retirement for life, after serving ONE term.
- Do congressmen insert line items into bills that mandate spending money with a company? Yes.
- Did that company happen to contribute to the congressman’s last campaign? Duh
- Did Goldman Sachs benefit from the TARP program that their former CEO, Hank Paulson directed? Yes, GS received over $12 billion through the back door from AIG on credit default swaps.
- Watch this video.
Disclosure: No Positions