Wednesday afternoon's halt in trading of shares of CIT Group Inc. (NYSE:CIT) had investors and the market speculating that a green light would be given by the Federal Deposit Insurance Corp. for funds to the lender. But instead of new money coming to CIT, the bank is mulling its next move that may include bankruptcy. CIT said there was "no appreciable likelihood" that it would receive additional rescue money from the government. So, what's next for CIT?
The company in a press release said its "board of directors and management, in consultation with its advisors, are evaluating alternatives." But its options seem limited. Bankruptcy is a strong likelihood for the company, which confirmed last weekend
hired bankruptcy specialist Skadden Arps Slate Meagher & Flom LLP. Finding a buyer to swoop up CIT is unlikely since the company has reportedly more than $7.4 billion due in the first quarter of 2010.
Meanwhile, it's looking more and more like the Obama administration is drawing the line with CIT on who it will not bail out. With assets of $75 billion, the company is considered to be much smaller than Lehman Brothers Holdings Inc. and Washington Mutual, which the government let fail last fall.
- Gerald Magpily
