It has been a while since I have posted, but I felt the need to discuss the situation at CIT.
This company appears to be a lender to midsize and small businesses that made some bad bets in the last few years and is now essentially broke. They had been pushing for a government bailout (what bank isn't?) and it seems that a bailout will not be forthcoming. This makes sense, and it is about time that there has been a return to sanity in regard to the banks. In the fall, the banks and their minions in government convinced everyone that bailing out the banks was necessary to save the world. Little was explained and little was gained. The economy went south anyway, some banks have now made spectacular profits and some haven't and many creditors and many shareholders are better off than they would have been had the banks gone under.
No one explained why the government couldn't use the vast sums of money spent on bailing out hedge fund counterparties to replicating the desired functions of the banks while allowing their creditors to lose. That was not done, but it appears that it finally will be done in regard to CIT. In no sense, despite CIT's claims to the contrary, is CIT fundamental to the economy, who had ever even heard of CIT.
More importantly, the political winds have turned against additional bailouts, and properly so. There is the sense that we were bamboozled and it is hard to argue with that. We were promised transparency and accountability, we got none. We were assured that the economy would falter if the banks weren't bailed out and the economy failed anyway. We were told the banks would fail without TARP, and the banks worth saving would have survived anyway. It is time to end the bailouts, end the handouts and possibly end some banks. CIT is a good first start.
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