Private aid, CIT Group toward bankruptcy

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The specialist credit to small and medium enterprises CIT Group announced Wednesday evening that his talks with the U.S. Treasury in order to obtain government assistance had failed, paving the way for a bankruptcy.

The review of the situation, led by both the Treasury and various federal agencies, led the authorities to the conclusion that the deterioration of cash CIT did not allow the government to assist effectively in this setting 101 years old.

CIT should not escape bankruptcy

As a result, CIT should not escape bankruptcy proceedings, showing the limits of the capacity and willingness of interventionist Washington.

CNBC, citing a source close to CIT, said the company is now a bankruptcy that could include a resort to Chapter 11 of bankruptcy code Friday.

"In the eyes of the Fed and the Treasury in the eyes at least, a course was taken, so that systemic risks facing the economy are deemed to be of the past now," notes Mike Knebel, a portfolio manager at Ferguson Wellman Capital Management.

In a brief news release, CIT announced that "discussions with federal agencies had ended and that it was unlikely that other measures of government assistance can be made in the short term."

If confirmed, the bankruptcy of CIT would be added to the list of known victims of the financial crisis that includes in particular Lehman Brothers and Washington Mutual.

In late March, ILC assets amounted to 75.7 billion, or 1/9e those of Lehman and 1 / 4 of those of Wamu.

Founded in 1908 in St. Louis, Missouri, CIT claims about one million customers on its website.

Most of them will now turn to another institution for their funding, while the credit crisis continues to disrupt their operation.

Steve Bartlett, CEO of the bank trade association Financial Services Roundtable, 10,000 small businesses could collapse in the event of bankruptcy of CIT.

CIT difficulties emerged two years ago following the decision of its CEO Jeffrey Peek to get a foothold in the market for subprime mortgages and loans to students, potentially lucrative but also very risky.  Private aid, CIT Group toward bankruptcy