CIT Fails, Fed Loses Billions

Pending

Written on - Not yet published to a wikizine

From: asymptoticlife.com

(Ernst Moeksis photo.)

Beleagured CIT Group announced over the weekend that it would seek Chapter 11 bankruptcy, eliminating all its equity holders. That means the value of its stock will go to zero-- including the $2.3 billion stake held by the U.S. Treasury. So much for socialism.

Wiki's report on CIT shows a long and troubled history, and includes this tidbit: CIT was not qualified to receive TARP funds from the fed, so it reorganized itself as a bank holding company in 2008 in order to get a bailout. And here's another choice maneuver: In April 2009, CIT raised a billion dollars by selling new shares of stock-- stock that will soon be worthless. Meanwhile, its CEO, Jeff Peek, earned $5.4 million last year, down from almost $12 million in 2007.

In a Chapter 11 filing, the company (and its bondholders) will survive the bankruptcy proceeding-- only its stockholders and other creditors will lose. After these innovative ways of suckering investors, I'd rather see the company disbanded. I am 100% in favor of a corporate death penalty.

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