Not Helping CIT Shows U.S. Government Officials Have Lost Their Minds

[JimofPennsylvan]

Have Treasury and White House Officials lost their minds in not helping CIT? Clear thinking would indicate that if CIT goes into bankruptcy a significant number of jobs could be put in jeopardy. It is completely and utterly unbelievable that with the unemployment rate at 9.5 % and climbing and the almost unanimous consensus amongst economist that unemployment is the critical economic problem facing the nation and the critical problem hampering a strong recovery from the current recession.

“CIT is a lender to 950,000 mostly small and midsize businesses” WSJ. “CIT (provides lending) services to about 300,000 retailers and 1900 manufactures and importers scattered all over the world. CIT finances as much as $40 billion in receivables (advances to U.S. manufacturers) in the U.S.” WSJ. The retail industry is the largest source of employment in the U.S. economy and CIT is a major foundational column for this industry in its financing of account receivables and the U.S. government is just going to let this company fail at this economically fragile time in our country’s history. U.S. government officials are acting incompetent and negligent here.

U.S. government officials can’t let CIT fail here. The U.S. government needs to give CIT the two to three billion dollar loan it is looking for or guarantee payment on the account receivables for CIT’s customers if CIT needs to go into bankruptcy to reduce its debts and provide debtor in possession financing when CIT goes into bankruptcy or come up with another viable salvage plan for CIT. Members of Congress need to get their heads out of the sand and start speaking out here and call for saving CIT and protecting the jobs that are in jeopardy here with CIT’s faltering.

 

[pete]

and when will it end?
It has to hit bottom before it gets better. I understand that many will lose jobs and it will not help any, but when does the help to people and institutions that were careless end?
In my opinion they all were/are no different than Madoff.

 

[editec]

and when will it end?
It has to hit bottom before it gets better. I understand that many will lose jobs and it will not help any, but when does the help to people and institutions that were careless end?
In my opinion they all were/are no different than Madoff.

Of course that same argument might be made of someone who has drownd, too.

Sure we could give them mouth to mouth recessitation, but what if they become dependent on us breathing for them?

Where will it end?

I don't know enough about the specifics of CIT, but I think we've got to take these cases one by one to see where we need to intervene.

The analysis comes down to this: Is the negative outcome of letting CIT dgo down, worse than the long term consquences of rewarding failure?

That's really a question, because I don't honestly know what the answer is, and frankly, I doubt anyone else KNOWS, either

 

[PubliusInfinitum]

ROFL...

"Its the ECONOMY STUPID"... remember that one?

With every bailout you exponentially extend the scope of the recession, in terms of time necessary for recovery and DEPTH...

Now why didn't we 'bailout' the thousands of small businesses, that have gone out business in the last year? There were vastly more jobs lost in those failures than the bog boys...

The answer is that the market can not sustain those companies... thus they basic elements of the companies had to be returned to the soup, so they could build a new market.

Now a new market will come... as soon as the Fed and the Federal Government GET OUT OF THE WAY and let it develope.

 

[wimpy77]

why CIT is lender to companies. they were stupid for getting into the sub prime business and they were doing poorly before this whole mess started. will all the business they lend to go out of business? no. in some people's opinion CIT would have been another AIG meaning it would have been a bottomless pit. at some point you gotta stop propping bad companies up. and oh btw those 2 or 3 billion they need is more like 8 or 9.

 

[Kevin_Kennedy]

CIT needs to be allowed to fail. The more you prop up failed businesses the more you keep the market from correcting itself and allocating resources efficiently, and as Publius said above you prolong the recession and make it worse.

 

[wimpy77]

they have apparently found a lifeline. just in and edit the board has approved the 3 billion agreement. so they have gotten a lifeline until they can sort their own junk out.

CIT Arranges $3 Billion in Financing From Bondholders, WSJ Says - Bloomberg.com

 

[Paulie]

At least it was handled privately.

 

[wimpy77]

yep that's the way capitalism works. notice it was only 3 billion the bond holders are seeing if they can work themselves out. if not they may end up going under anyways.