Comments on: CIT Bankruptcy Likely http://www.ritholtz.com/blog/2009/07/cit-bankruptcy-likely/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Thu, 18 Mar 2010 20:18:08 -0400 http://wordpress.org/?v=2.9.2 hourly 1 By: crazyjerrygarcialover http://www.ritholtz.com/blog/2009/07/cit-bankruptcy-likely/comment-page-1/#comment-194681 crazyjerrygarcialover Fri, 17 Jul 2009 11:11:43 +0000 http://www.ritholtz.com/blog/?p=32462#comment-194681 Points of clarification: -My assertion is not in quotes. -Excerpt from article is at bottom of my original post in quotes. Apologies for poor grammar/lack of clarity in my original post. I will now put my foil hat back on. Points of clarification:

-My assertion is not in quotes.

-Excerpt from article is at bottom of my original post in quotes.

Apologies for poor grammar/lack of clarity in my original post. I will now put my foil hat back on.

]]> By: crazyjerrygarcialover http://www.ritholtz.com/blog/2009/07/cit-bankruptcy-likely/comment-page-1/#comment-194676 crazyjerrygarcialover Fri, 17 Jul 2009 10:59:30 +0000 http://www.ritholtz.com/blog/?p=32462#comment-194676 I propose a far more nefarious reason by CIT will be going bye-bye in an era where taxpayer funded bailouts are the norm, not the exception. See link to NYT article from 7/16/09 pasted below (and linked by this blog just yesterday, in fact. Excerpt from article "suggestive" of my assertion in quotes at bottom of this post. http://www.nytimes.com/2009/07/17/business/global/17bank.html?_r=1 The government and Fed are indeed taking our nation down a very dangerous path. Financial power concentrated in fewer hands. Oligarchy anyone. It is not mere coincidence that JPM was backstopped by the Fed (read US taxpayers) guaranteeing $30B in losses; as I'm certain most readers here are aware, Jamie Dimon serves on the Board of Directors of the Federal Reserve Bank of New York (yep, the one that Timmy Geithner used to head). Now, I've seen all kinds of speculation about why the government (particularly Secretary Geithner) will allow CIT Group to fail and there are many good reasons. Here's one that I've yet to see discussed anywhere. Allowing them to fail strenghthens one of the "winners" picked by the government: JP Morgan. Again, read pasted excerpt from NYT article below (link to article pasted at top of this post). "Michael J. Cavanagh, the chief financial officer at JPMorgan, said its profit and fees from this business were “a record for us in a quarter and a record for anybody at any firm in any quarter.” The bank, he added, was “so very proud of those results.” It has also profited from the demise of weaker banks to enlarge its market share in mortgages and retail banking. On Tuesday, as the CIT Group, a lender to many small businesses, negotiated with the government to avoid collapse, JPMorgan signaled that it was watching. “It would be an opportunity for us in these states if CIT was unable to continue lending to borrowers,” Tom Kelly, a spokesman at Chase, was quoted by Dow Jones Newswires as saying." I propose a far more nefarious reason by CIT will be going bye-bye in an era where taxpayer funded bailouts are the norm, not the exception.

See link to NYT article from 7/16/09 pasted below (and linked by this blog just yesterday, in fact. Excerpt from article “suggestive” of my assertion in quotes at bottom of this post.

http://www.nytimes.com/2009/07/17/business/global/17bank.html?_r=1

The government and Fed are indeed taking our nation down a very dangerous path. Financial power concentrated in fewer hands. Oligarchy anyone. It is not mere coincidence that JPM was backstopped by the Fed (read US taxpayers) guaranteeing $30B in losses; as I’m certain most readers here are aware, Jamie Dimon serves on the Board of Directors of the Federal Reserve Bank of New York (yep, the one that Timmy Geithner used to head).

Now, I’ve seen all kinds of speculation about why the government (particularly Secretary Geithner) will allow CIT Group to fail and there are many good reasons. Here’s one that I’ve yet to see discussed anywhere. Allowing them to fail strenghthens one of the “winners” picked by the government: JP Morgan. Again, read pasted excerpt from NYT article below (link to article pasted at top of this post).

“Michael J. Cavanagh, the chief financial officer at JPMorgan, said its profit and fees from this business were “a record for us in a quarter and a record for anybody at any firm in any quarter.” The bank, he added, was “so very proud of those results.”

It has also profited from the demise of weaker banks to enlarge its market share in mortgages and retail banking. On Tuesday, as the CIT Group, a lender to many small businesses, negotiated with the government to avoid collapse, JPMorgan signaled that it was watching.

“It would be an opportunity for us in these states if CIT was unable to continue lending to borrowers,” Tom Kelly, a spokesman at Chase, was quoted by Dow Jones Newswires as saying.”

]]> By: Pat G. http://www.ritholtz.com/blog/2009/07/cit-bankruptcy-likely/comment-page-1/#comment-194508 Pat G. Thu, 16 Jul 2009 20:42:04 +0000 http://www.ritholtz.com/blog/?p=32462#comment-194508 "That’s right, very little origination over the past few quarters." Couldn't you say the same thing about all the banks over the past few quarters? That would imply that they have been acting like their bigger brethren. Besides, I agree with Karen; "i believe there will be an 11th hour white knight". “That’s right, very little origination over the past few quarters.”

Couldn’t you say the same thing about all the banks over the past few quarters? That would imply that they have been acting like their bigger brethren. Besides, I agree with Karen; “i believe there will be an 11th hour white knight”.

]]> By: Andy T http://www.ritholtz.com/blog/2009/07/cit-bankruptcy-likely/comment-page-1/#comment-194214 Andy T Thu, 16 Jul 2009 13:13:12 +0000 http://www.ritholtz.com/blog/?p=32462#comment-194214 Pete from CA: sorry. Went to bed. To respond: No, I don't think that will scare anyone into lending. Banks are like people: "fight or flight" instincts take over during duress. And they're definitely in the "flight" mode. Self-preservation is their game right now. Pete from CA: sorry. Went to bed. To respond: No, I don’t think that will scare anyone into lending. Banks are like people: “fight or flight” instincts take over during duress. And they’re definitely in the “flight” mode. Self-preservation is their game right now.

]]> By: cvienne http://www.ritholtz.com/blog/2009/07/cit-bankruptcy-likely/comment-page-1/#comment-194203 cvienne Thu, 16 Jul 2009 12:31:01 +0000 http://www.ritholtz.com/blog/?p=32462#comment-194203 @florida bear Why do you think they "stress tested" 19? @florida bear

Why do you think they “stress tested” 19?

]]> By: florida bear http://www.ritholtz.com/blog/2009/07/cit-bankruptcy-likely/comment-page-1/#comment-194198 florida bear Thu, 16 Jul 2009 12:18:43 +0000 http://www.ritholtz.com/blog/?p=32462#comment-194198 Isn't CIT the 20th largest U.S. bank? Didn't CIT pass the stress test? NO Bailouts! Isn’t CIT the 20th largest U.S. bank? Didn’t CIT pass the stress test? NO Bailouts!

]]> By: VennData http://www.ritholtz.com/blog/2009/07/cit-bankruptcy-likely/comment-page-1/#comment-194181 VennData Thu, 16 Jul 2009 09:33:48 +0000 http://www.ritholtz.com/blog/?p=32462#comment-194181 All those voices complaining about bailouts, now they don't bailout, and they're still complaining. Package them up with 'Business Week' Someone will buy them for two bucks. All those voices complaining about bailouts, now they don’t bailout, and they’re still complaining.

Package them up with ‘Business Week’ Someone will buy them for two bucks.

]]> By: Pete from CA http://www.ritholtz.com/blog/2009/07/cit-bankruptcy-likely/comment-page-1/#comment-194179 Pete from CA Thu, 16 Jul 2009 07:05:06 +0000 http://www.ritholtz.com/blog/?p=32462#comment-194179 Andy wrote "The rest of the big boys are hoarding as well….the gov’t is making a calculated political decision here….people are getting pissed…." I read this as "the gov't wants to scare the other banks into lending to avoid deflation" and my question was whether anyone thought this would work. If I misinterpreted what Andy wrote then never mind. Andy wrote “The rest of the big boys are hoarding as well….the gov’t is making a calculated political decision here….people are getting pissed….”

I read this as “the gov’t wants to scare the other banks into lending to avoid deflation” and my question was whether anyone thought this would work. If I misinterpreted what Andy wrote then never mind.

]]> By: FromLori http://www.ritholtz.com/blog/2009/07/cit-bankruptcy-likely/comment-page-1/#comment-194176 FromLori Thu, 16 Jul 2009 06:11:11 +0000 http://www.ritholtz.com/blog/?p=32462#comment-194176 Did Mrs. BO sing? http://www.ft.com/cms/s/0/a44b5690-7182-11de-a821-00144feabdc0.html Citi close to secret deal with regulator Did Mrs. BO sing?

http://www.ft.com/cms/s/0/a44b5690-7182-11de-a821-00144feabdc0.html

Citi close to secret deal with regulator

]]> By: TripleB http://www.ritholtz.com/blog/2009/07/cit-bankruptcy-likely/comment-page-1/#comment-194174 TripleB Thu, 16 Jul 2009 05:40:31 +0000 http://www.ritholtz.com/blog/?p=32462#comment-194174 and now we discover that the ones that are too big too fail [BAC, C] have been operating under "double secret probation" http://www.thestreet.com/story/10544380/1/bofa-citi-operating-under-mous-report.html and now we discover that the ones that are too big too fail [BAC, C] have been operating under “double secret probation”

http://www.thestreet.com/story/10544380/1/bofa-citi-operating-under-mous-report.html

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