Can CIT (CIT) Convince the U.S. That It Has the Economy By the Balls?

There has been one M.O. among companies that have received U.S. government bailouts that works. It goes something like this "We have the economy by the balls. If we go down you go down. Ha Ha! Now give us our money."

This tactic has worked for AIG (NYSE: AIG), Citigroup (NYSE: C) and General Motors (OTC: GMGMQ) and now embattled lender CIT Group (NYSE: CIT) is trying it.

According to documents obtained by Bloomberg News, CIT is telling regulators that its demise would put 760 manufacturing clients at risk of failure and "precipitate a crisis" for as many as 300,000 retailers. CIT said a collapse would ripple across the "small and medium-sized businesses who rely on CIT to operate -- to pay their vendors, ship goods to their customers and make their payroll."

So far the FDIC has resisted providing CIT federal backing of its debt, but today reports surfaced the U.S. Treasury is looking at options for the company.

If CIT can prove the case that it has the U.S. economy by the balls they will likely get some sort of federal backing. If they can't, then bankruptcy could be the end game.

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