CIT Group like so many other lenders made some seriously bad decisions and got caught up in the subprime mortgage debacle that came to a head towards the end of last year.  Although the centennial bank holding company received 2.3 billion from the government under the Troubled Asset Relief Program last year the government did not award CIT a separate program that would allow it to issue debt at low interest rates. 

On November 1, 2009 CIT Group Inc. (CITGQ.PK) shares plunged 65% to .25 cents after the lender filed Chapter 11 bankruptcy.  Almost immediately following on November 3, 2009 CIT Group announced that the U.S. Bankruptcy Court scheduled a hearing to consider prepackaged plan of reorganization for December 8, 2009.  That is good news.

According to documents reviewed by The Wall Street Journal about 700 companies have a total of $3.9 billion in undrawn revolvers from CIT. Many are small businesses that obtained revolving facilities of about $10 million to $50 million in size. CIT is the sole or main lender to two-thirds of these companies, and a failure of the lender would leave many without access to funds.  With this in mind the the prepackaged plan of reorganization scheduled for December 8, 2009 could very well fall in favor for the bank holding behemoth. 

At just .$018 as of November 6, I'll take a significant risk and order 9,600 shares upon market opening this Monday.  At worst I'm only out $1700 but there is the potential for a nice return over the next six months.

About CIT Group (CITGQ):

CIT is a bank holding company with more than $60 billion in finance and leasing assets that provides financial products and advisory services to small and middle market businesses. Operating in more than 50 countries across 30 industries, CIT provides an unparalleled combination of relationship, intellectual and financial capital to its customers worldwide. CIT maintains leadership positions in small business and middle market lending, retail finance, aerospace, equipment and rail leasing, and vendor finance. Founded in 1908 and headquartered in New York City, CIT is a member of the Fortune 500. www.cit.com

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• $500 tax cut for most workers – (Didn’t we already try this?   Last year’s $600 rebate checks failed to “stimulate” the economy.)
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A few months back we were told if the $700+ billion financial institution bailout (Troubled Asset Relief Program (TARP)) was not passed immediately the earth would stop on it’s axis, the stars would fall out of the sky and life as we knew it in the US would cease to exist.  So after much debate it was passed…and the credit sector did not rebound and no stars fell out of the celestial heavens…that I’m aware of.

So after that monumental debacle of a precedent was set,  money seemed to flow out of the capital on what seemed like a daily basis in bailouts and beggar handouts at your expense.  Now, after the zombie mantra of “change” has finally started to wane we get whacked with a near one trillion dollar stimulus plan.

God help our children who will have to shoulder much of this epic burden.

The housing market has tanked, many hard working Americans now find themselve’s jobless and we see the US government taking more and more control of the commercial sector and centralizing it’s power.  Is taxing the American citizens another one trillion dollars really going to make things any better?  I’d rather just roll the dice and ride it out at this point.  What do you think?

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