Regulators Nearing Deal To Save CIT Group (CIT)

The Wall Street Journal reported that CIT Group (NYSE: CIT) and federal regulators were working on the details of aid package late Tuesday night after customers pulled hundreds of millions of dollars from the lender.

Corporate customers drew down on their credit lines Monday and Tuesday. The WSJ reported that the drawdowns could be in the several hundred million dollar range; one said a number discussed by the board ran as high as $775 million. That, of course, placed additional strain on the cash-strapped company and increased the urgency for a resolution.

Under the plan, regulators would allow CIT to transfer assets from its holding company to its bank in Utah; the Federal Reserve would let CIT pledge some of those assets at its discount window and the company would take steps to refinance some of its existing debt. The WSJ said the package isn't finalized yet and it remains uncertain whether a deal will actually happen.

CIT's board has been meeting regularly the past few days, hoping to come to a solution soon.

CIT rose 19% in yesterday's trading as it became clear that at least some arms of the government would offer assistance to the company.

The WSJ did say that government officials remain split over how much help CIT should be offered and some feel that CIT could be trying to overhype the negative effects of its potential collapse to scare legislators into action.

The FDIC remains reluctant to give CIT access to a temporary program that allows banks and thrifts to issue debt with government backing.

You May Also Be Interested In

• Cresco Labs secures $50 million credit facility with Needham Bank
• Invesco High Income Trust II names new portfolio managers
• Webull launches mutual funds for IRA accounts