CIT group officially declares bankruptcy

I don't get it. I don't understand why they had to file bankruptcy in the first place if everything is "all systems go" at CIT.
I mean everything remains the same.
They are still lending.
Heck, people holding CIT bonds are actually HAPPY that the company declared bankruptcy! That is absurd.

The ONLY thing that changes is that the bailout money is now gone.... *pffft* (snaps fingers)
Where does that money go? Into Lehman coffers?

Ridiculous

And of course the markets will respond well. This is seen as a good thing anylonger. Redistribution of wealth.

The markets have a direction. Everyone loses while Lehman and others pick up the gains.

I know I'm way off base here, I'm just trying to understand it and so far, I can't.

reply to post by JayinAR


Basically they did it so they could keep things "running as usual" It keeps the creditors to which they owe insane amounts of money away from them while they try to raise capital.

Originally posted by peacelove
In my honest opinion, the government should have bailed out CIT.


Being an economy and finance major, this bankruptcy truly scares me.

i know corporations taking tax payer money is frowned upon by many, but this will have a monsterous impact on the economy.
Its a matter of choosing the lesser evil, really.

but we spent too much money on a failed stimulus package and bailing out other companies who failed before CIT.

I am under the belief that 2.8billion was already used as a 'bail out'


My bad it was only $2.3 billion...

LOL as you are a student and in the future going to be one of the people in this industry...I can see why the system is screwed....
The 2billion dollar bail out isnt new knowledge.
Ask your 'teachers' to teach you better



[edit on 2-11-2009 by 297GT]

Well you know world domination is difficult let's hope for the worst tomorrow. We need markets down and profits up.

Originally posted by projectvxn
reply to post by orkson

 

With this news comes the potential that this action may now bring a surge in unemployment. The big boys at Goldman Sachs are making a pretty penny out of this bankruptcy. And they know full well what the ramification of this collapse will be. Why is the government allowing such a flagrant display of insider trading and racketeering?

The government, and more specifically the Treasury, has been controlled by Goldman Sach's alums for at least a decade. Goldman is the real economic power behind the White House, but it is only a front organization for the much larger global economic cabal, which has its sights set on a global government, a global bank, and a global currency--in their hands alone.

So, I'm sitting here wondering. How long will it actually take before we see the true impact of this bankruptcy on the economy? If any impact at all.

reply to post by Trayen11


Hi, Trayen11.

IMO this bankruptcy is like a nail more on the coffin.

When the crumble will occur (it will) there will be a lot of causes for that.
But none could be named individually responsible for that.
It's like a house built on stilts : you may breack or remove alot of them before the whole house crumbles suddenly.
Each removed stilt isn't individually responsible for that : even the last one.
Simply, you have reached the point of structural collapse.

I don't know about structural collapse just yet (though I am fairly certain it is not outside of the realm of possibility), but I think that the key to the CIT bankruptcy will be whether it has any effect on its lending facilities to small business owners.

Credit is already tight, so I don't think that the failure of CIT will be anything new in that regard for business owners. Credit has been tight for a long time now, going on over 2+ years.

But how this will effect existing CIT clients should be interesting to watch. If credit terms are suspended (as in closing down a company's Line of Credit, for instance), then there will be some serious fallout because too many businesses rely on their financier to keep them afloat. And there aren't a whole heck of a lot of lenders in the market right now sticking their head out for a small business owner that can take CIT's place. Most small banks are just treading water or drowning. Credit is tight, tight, tight.

But for the entrepreneur or business owner, this is really not all that new. They have been dealing with tight credit for 2 years now. So a lot of businesses have learned to adapt, cut back on expenses, or simply shut their doors. Most business owners are not in growth mode that requires overextending themselves on debt obligations. If anything, they are trying to get out of debt and build their reserves to weather the storm.

So I don't think that CIT filing bankruptcy is really going to be all that bad - Because credit was already tight as it is, and the existing businesses that have debt obligations to CIT will still be required to continue making their monthly loan installment payments. I don't really see how this will have a huge impact, because it sounds from the news that CIT will continue to operate in the marketplace. Only if we see CIT suddenly pull its lending facilities from small business owners - that's when it could get ugly.

You may or may not know that CIT was a big time player in the equipment finance business. That means that they finance hard asset equipment for business owners - phone systems, computers, machinery and the like. Most business owners have cut their equipment budget to the bone, and they are trying to make do with what equipment they already have and delaying making upgrades unless it is an absolute must. So I don't see much of an impact to small business owners in that regard either.

Cramer Does It Again with CIT Call
seekingalpha.com...

Jim Cramer slaps viewers with a massive burn!!!