MB: Shocking! Big news over the weekend as CIT a 101 year old lender to small and mid-size business files for Chapter 11 bankruptcy. Over the last year we have seen a number of banks fail; however we have also seen a large amount of banks being saved by our government using TARP funds. This leaves us to question, how does our government decide which banks to save and which ones to let fail? If the goal of TARP is to stabilize our economy by providing financial assistance to companies in need then CIT should without question be bailed out. A few facts about the company clearly illustrate the importance of it’s survival.
1. 5 Largest bankruptcy in US history
2. 101 year old company
3. Largest lender to small and mid-sized business in the US
4. An estimated 95% of new jobs created are from small to mid-sized companies which CIT lends to
5. Received 2.3 billion in bailout money last year, which is now likely to be completely lost.
6. Will create a spiral effect of bankruptcies as small business’s and retailer’s will not be able to get lending.
I have never been an advocate for large amounts of stimulus spending as I feel that a market economy will be better of self correcting itself. However knowing small business’s have only received an estimated .6% of TARP funds I find it necessary to provide them with more financial assistance, as they are such a huge contributor to the stabilization of our economy.
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