Sunday, July 19, 2009

CIT Watch

by Calculated Risk on 7/19/2009 09:31:00 AM

Not much news on CIT ...

From Bloomberg: CIT Group’s Banks Said to Weigh Bankruptcy Financing

CIT Group Inc. advisers, including JPMorgan Chase & Co. and Morgan Stanley, are discussing options for funding the lender if it enters bankruptcy, people with knowledge of the matter said.
...
“This thing doesn’t have a future,” CreditSights analyst David Hendler said yesterday in a telephone interview. “Anything is possible but the problem is not solvable anymore. They’re just in denial it’s finally over,”
From Bloomberg: Alabama Hardware Distributor Blames CIT Woes for Its Bankruptcy
A hardware distributor in Alabama became the first company to blame the troubles of commercial lender CIT Group Inc. for its bankruptcy yesterday when it filed for protection from creditors.
From WSJ Real Time Economics: CIT’s Customers Issue an Urgent Request
Thirty-two trade groups, in an unusual display of unity, pleaded in a letter on Friday night for the Obama administration to reverse its decision and extend aid to the beleaguered small-business lender CIT Group Inc ...
From the letter:
Dear Secretary Geithner:

As the U.S. and world economies struggle to recover from the most devastating recession in recent memory, we are writing to impress upon you the very severe ramifications that a CIT bankruptcy would have on more than one million small- and medium-sized businesses, their partners in the U.S. retail industry and the manufacturers and service providers that supply that sector. Our organizations represent thousands of these small- and medium-sized enterprises and their suppliers as well as the most significant retail operations in this country. We urge the government to reconsider every possible option to address the current stresses confronting CIT and to prevent further tightening of the credit markets.

... Without CIT, thousands of retailers may be forced out of business because their suppliers will be put out of business. Such a ripple effect could set back the recovery of the manufacturing and retail sectors, and therefore the U.S. economy, by several years. CIT is one of the leading factoring companies in the United States and is a vital source of financing for manufacturers as well as the small and medium-sized vendors who are the primary suppliers of merchandise sold in U.S. retail establishments. Because of CIT’s primacy in this field, they have essentially become the banker to “Main Street”, and as such, it is absolutely essential for the government to utilize every tool at its disposal to prevent a CIT bankruptcy.

Uncertainties over CIT have already provoked a credit squeeze that threatens payments and payrolls in thousands of businesses. As this uncertainty persists, and if CIT is forced to undertake a bankruptcy filing, the ripple effect will be felt in every city and state across this country as the further tightening of credit markets will make it incredibly difficult, if not impossible, for many of the companies who currently rely on CIT for financing to remain in business. The number of jobs that depend on the successful outcome of the CIT crisis is immeasurable.