Thursday, July 23, 2009

CIT's Last Hope May Be Government Rescue

In yet another twist to the story that will not end, Senator Chriss Dodd (D-CT) stated with regards to CIT Group Inc.(CIT) :

"I wouldn't rule out the possibility of a government intervention financially",
"Maybe there are some alternative ideas that would allow the company to survive in an altered state, but still allow it to provide the assistance and support they have to smaller business"

This statement comes on the heels of what appears to be an effort by the advisers to CIT's bondholders to push the company into Chapter 11 bankruptcy in August. This news was initially broken by Bloomberg(here), who purpotedly learned of the adviser's intentions through "people familiar with the matter".

We must remember that although Chris Dodd is the Chairman of the omniscient and omnipotent Senate Banking Committee, his voice does not necessarily represent that of the Administration's, or for that matter, the voice of fellow Democrats in Congress. If your recall, earlier this week Chris Dodd managed to get in the crossfire of the impotent Capitol Hill debate that centered around whether or not to buy more F-22 fighter jets this year. This was by the way, one of the more irrelevant and useless debates we have ever seen, as the entire escapade was about Obama trying to prove that he could save the country slightly more than a Billion dollars by curtailing a weapons program. For whatever reason, Dodd and a handful of others bucked up to Obama and positioned themselves as staunch defenders of the program. The most likely explanation being that the F-22's are scheduled to be manufactured in Dodd's district. This is beyond the point though, which is that the king's soldiers do not always fall in line with each other. Throw a little high-from-victory Republican opposition into CIT's bailout equation, and the outcome appears far from a given.
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