CIT Bankrupcty – More Tax Dollars Down a Rat Hole

November 1, 2009 by  
Filed under Economics

Another “too big to fail” lender has ….. wait for it …. failed! Yes, CIT Group, Inc. has filed the 5th largest bankruptcy in U.S. history so that it can wipe its hands clean of billions in bond debt, including $2.3 billion in taxpayer money that we gifted to them on 12/31/2008. Belated Happy New Year to us!

And what will CIT do after its pre-packaged bankruptcy clears the courts? Start lending again, using the same business model that put it in the dumper to begin with.  How about funding a fine company like Eddie Bauer. Oh – you already did – after Eddie Bauer filed bankruptcy last summer for the second time since 2005? Too bad for us.

The CEO is Jeffrey Peek, who pushed CIT into the sub-prime mortgage and student loan business to “pump up growth.” How’s that plan working out for you, Mr. Genius?

If you own Bank of America stock (I’m glad we sold ours a year ago), you might want to check its balance sheet and think about getting out. CIT owes B of A $7.5 billion, all unsecured.

I don’t give a rat’s you-know-what about whether a company like CIT lives or dies. There will always be another to take its place. I do have problems having billions in our hard earned tax dollars flushed down that rat’s hole.

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12 Responses to “CIT Bankrupcty – More Tax Dollars Down a Rat Hole”
  1. Rick Beagle says:

    Thank you for the article. I guess my question is this, why is the taxpayer money going down the toilet if the company is going to remain in business? What I mean, why aren’t we getting a cut to the front of the line for our pound of flesh? There is NO reason -in my estimation- that the tax payers should be left holding the bag if the company remains viable.

    Time to write our government officials and ask why these clowns are being allowed to duck their responsibility?

    Rick Beagle

  2. MasterPo says:

    Rick – A better question is: Why NOT let them fail?!

    What we have here is government think on a grand (and expensive!) scale.

    Government *never* cancels an expensive and failed program. Oh no. They just spend more on it.

  3. Rick Beagle says:


    I have no problem letting them fail, but I want our billions back. The aggravating element of this article (imho) is the fact that they ARE NOT failing, but yet have found a way to avoid paying us (the taxpayers) back. Which I think is criminal, and if it isn’t, it should be. I want our dang money back.

    Rick Beagle

  4. MasterPo says:


    You couldn’t POSSIBLY have *really* believed the gov (and therefore the tax payer) was EVER going to get paid the $$$ back, muchless make a profit off these “bailouts”! :-/

    • Rick Beagle says:


      Nope, but the lack of effort is a bit ruffling. You can count on something being pushed through the House to try and remedy this problem next week. Of course, you can count on it failing in our overtly corrupt senate….

      -Rick Beagle

  5. PW says:

    I bet if we tracked back to see who contributed to Dem and Rep political campaigns we would find out why these companies are not allowed to fail. And why we will never see a penny of a return on our taxpayer money. They should be allowed to fail. I read where AIG biggies high income earners are starting up another company, same people, same business. That way they are moving to another company where salaries cannot be controlled, moving the business with them, and screwing the taxpayers again, and the good ole politicians are closing their eyes to what is happening. Has anyone ever gotten $ back from the gov?? I say let them all fail, if they cannot run a company any better then that then perhaps they learn the hard way. I am so done with gov. handouts for friends, family etc.

    • MasterPo says:

      Everyone took something, one way or another.

      At this point it’s less than academic to say who got paid to look the otherway.

      The lesson should be not to throw good money after bad.

      And trust let the same people who made the mess to clean it up!

  6. MasterPo says:

    How’s the gov’s “investment” in GM doing? 😉

  7. Gotta love it though! The Market didn’t implode and took it in stride!

    We own 33% of Citigroup, and they raised base salaries by 50% for thousands of executives.

    God bless America!

  8. kitty says:

    @Master Po “You couldn’t POSSIBLY have *really* believed the gov (and therefore the tax payer) was EVER going to get paid the $$$ back, muchless make a profit off these “bailouts”! :-/”

    Are you aware that Goldman, AXP, USB and others that have paid TARP money back, paid the equivalent of 20% yearly interest in interest payments and repurchased stock warrants? I don’t see that as particularly bad return. And until the companies that still have the money follow in CIT footsteps, they keep paying interest.

    As to CIT – I agree with Rick’s first post here: why shouldn’t the company that emerges from bankruptcy still owe the taxpayers?

    Samurai – I haven’t really followed the story of Citygroup’s executive so I don’t know if it is 1) government’s failure to manage properly – the government is a single major shareholder of City so it should pay attention, or 2) existing contracts that have to be honored by law 3) payment to those who did make money. There are executives and there are executive. If a particular executive responsible for losing billions, he should get nothing. If a particular executive brought the company billions, I don’t see why he shouldn’t get a nice bonus. Keep in mind that we do want City to succeed – it is the only way to get the money back, so we don’t want best people to leave. Regardless, it is a relatively small amount. Talking about millions when we spent billions is like complaining about 50 cents while throwing $400 out the window. How much money the government is wasting every year?

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