CIT Group Bankruptcy Still Possible as CEO Jeffrey Peek Retires
Posted on | October 13, 2009 | No Comments
CIT Group still has the chance of filing bankruptcy and to compound matters the current CEO, Jeffrey Peek, plans to retire at the end of the year. CIT Group lends to small and medium sized businesses and has seen its stock price drop to .90, down over 80% year to date. Peek has been the CIT Group CEO since 2003 but has widely been criticized for being very slow to recognize the effects of the credit crunch.
To offset the effects of the credit crunch many investors and analysts suggested increasing borrowing costs but it was too little too late as the company is on the brink of bankruptcy. The company is attempting to exchange its current debt for new debt and equity. The issue is that the exchange is not working as planned and it is highly likely that CIT Group will file for protection bankruptcy. At the end of June CIT Group listed $71 billion in assets on its balance sheet.
It has been made apparent that the government is not going to bail out CIT Group as they did many other “too big to fail” companies. This begs the question “what is too big to fail?” Obviously $71 billion is not too big. Goldman Sachs actually benefits from the bankruptcy to the tune of $1 billion; it should come as no surprise that the benefits of “Government” Sachs is a strong reason as to why this company was not bailed out.
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Author: Alan Lake
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