CIT in crisis as US regulators at odds over bailout plan for lender
THE survival of CIT Group, a key source of financing for thousands of small and medium-sized companies in the US, became ensnared in disagreements between regulators in Washington yesterday.
The Federal Deposit Insurance Corp, which insures deposits at US banks, opposed an attempt by the Treasury Department and Federal Reserve to rescue the struggling lender by granting it access to a government debt-guarantee program.
The prices of CIT shares and bonds tumbled as investors worried the commercial lender would not be able to meet its obligations to bondholders, perhaps pushing the company into bankruptcy and disrupting the financing on which its corporate customers depend.
The failure of the lender – which is preparing for possible bankruptcy – would be the biggest collapse of a financial firm since Washington Mutual in September.