Old Project Avalon Forum (ARCHIVE) - View Single Post - CIT Preparing to Seek Chapter 11 Bankruptcy & Don't Panic! 2 Days Until Collapse?

peaceandlove · 11-01-2009, 10:39 PM

CIT BOOM BOOM!

Sunday, November 1. 2009
Posted by Karl Denninger

Hope you didn't buy any CIT on the hope of a bailout! http://www.bloomberg.com/apps/news?p...yTH2eLwY&pos=1

Nov. 1 (Bloomberg) -- CIT Group Inc., a 101-year-old commercial lender, filed for bankruptcy with financing from investor Carl Icahn after the credit crunch dried up its funding and a U.S. bailout failed.

The practical impact of this is likely to be:

Their factoring business is unlikely to be significantly impacted. This is a very profitable line of work, and while I have often (and still do) argue that any business using it is certifiably insane, it should continue.

Their "general" lending, however, is almost certain to be severely curtailed. I have seen estimates that it could fall by as much as 90%, and that seems reasonable to me.

For many small businesses the latter could be particularly acute. I would also expect the margins on their factoring business to be adjusted (better for them, worse for retailers) which could put a further squeeze on their small and mid-sized business clientele.

This will leave a mark - we'll have to see how bad it gets for retailers in the coming weeks and months, but being right in front of the holidays it cannot be a welcome development.

SOURCE: http://market-ticker.denninger.net/a...OOM-BOOM!.html

11-01-2009, 10:39 PM	#2
peaceandlove Avalon Senior Member Join Date: Sep 2008 Location: Turtle Island Posts: 2,776	Re: CIT Preparing to Seek Chapter 11 Bankruptcy & Don't Panic! 2 Days Until Collapse? CIT BOOM BOOM! Sunday, November 1. 2009 Posted by Karl Denninger Hope you didn't buy any CIT on the hope of a bailout! http://www.bloomberg.com/apps/news?p...yTH2eLwY&pos=1 Nov. 1 (Bloomberg) -- CIT Group Inc., a 101-year-old commercial lender, filed for bankruptcy with financing from investor Carl Icahn after the credit crunch dried up its funding and a U.S. bailout failed. The practical impact of this is likely to be: Their factoring business is unlikely to be significantly impacted. This is a very profitable line of work, and while I have often (and still do) argue that any business using it is certifiably insane, it should continue. Their "general" lending, however, is almost certain to be severely curtailed. I have seen estimates that it could fall by as much as 90%, and that seems reasonable to me. For many small businesses the latter could be particularly acute. I would also expect the margins on their factoring business to be adjusted (better for them, worse for retailers) which could put a further squeeze on their small and mid-sized business clientele. This will leave a mark - we'll have to see how bad it gets for retailers in the coming weeks and months, but being right in front of the holidays it cannot be a welcome development. SOURCE: http://market-ticker.denninger.net/a...OOM-BOOM!.html Last edited by peaceandlove; 11-01-2009 at 10:43 PM.