Skip to content

CIT: Bail Out Itself? Hope For Out Of Court Resolution? Other Places Factoring Clients Will Go

July 28, 2009

John Tanny, who writes a weekly column for Forbes, offered his thoughts on CIT in this, his most recent offering.  His general take on the situation is that the government should not intervene when it comes to bailing out major banks because they are “too big to fail”, and that if they are going to fail, the market will adjust and account for that.

The trick here is to let failures, and their possibility , stand free of government intervention. If we don’t, we’ll not only give the federal government a greater role in finance, but we’ll rob the financial world of the knowledge necessary to solve future crises that for now are unknown.

While it is our personal opinion that this may not be the best position to take (with so many clients in the garment / clothing industry, including retailers, clothing designers and garment manufacturers, nobody wants to see so much of the business suffer as a result of collateral damage), we also feel that this article is worthwhile reading.

It also points to a few other companies that may be able to pick up some of the business that CIT may not be able to handle in the months:

Sterling Bancorp ( STLnews people ) CEO Louis Cappelli told USA Today that CIT’s struggles have them “poised to do more business.” Likewise, Wells Fargo ( WFCnews people ) is set to expand its factoring business in order to serve companies needing accounts-receivable financing.

Bloomberg discusses here how a “pre-packaged bankruptcy” may be the best idea for CIT:

“Even if the tender succeeds, we believe CIT remains at risk for filing for bankruptcy because its business model is broken,” Steer and Hendler said. “Attempting a prepackaged bankruptcy may be CIT’s most viable alternative at this point.”


Comments are closed.

%d bloggers like this: