CIT Group

CIT Group, Inc. (CIT), founded in 1908, is a bank holding company headquartered in New York that is primarily known as a commercial lender with a focus on small and middle market businesses.

Bailouts
CIT received $2.33 billion in TARP funding in December 2008 through the Capital Purchase Program, when the U.S. Treasury used the $2.33 billion to purchase CIT's preferred stock and received CIT warrants. When CIT filed for bankruptcy less than a year later, the Treasury Department added that it was unlikely to recover much, if any, of the bailout money.

Attempt to secure additional bailouts
In the summer of 2009, when CIT appeared to be headed for bankruptcy, CIT approached the federal government to try to secure additional bailout funds, but it was unsuccessful.

Conversion to bank holding company
Beginning in October 2008, CIT undertook a series of steps to become a bank holding company. It converted its industrial bank into a Utah state bank called CIT Bank and reclassified some of its debt in order to meet capital reserve requirements. Its application to become a bank holding company was approved on December 22, 2008.

Bankruptcy
CIT filed for bankruptcy on November 2, 2009.

Apparel industry
CIT "is the biggest so-called factoring firm -- a major source of financing for small to midsize businesses with sales of about $5 million to as much as $200 million or $300 million. A factoring firm buys receivables from apparel manufacturers and gives them cash immediately. That way, those companies in need of working capital don't have to wait for an average of 60 days to get paid from their retailer customers."

"CIT provides financing for almost 2,000 companies that supply merchandise to more than 300,000 stores in the U.S. About 60 per cent of the apparel industry depends on CIT for financing."

Related SourceWatch articles

 * bank
 * banking
 * Capital Purchase Program
 * TARP