Tuesday, July 14, 2009

Continuing financial problems

Bloomberg and Fortune are reporting storm clouds circling CIT Group, Inc., a financial firm the mostly lends to firms. Bloomberg reports that "investors [are] flee[ing] the 101-year-old company’s bonds and shares on concern it may become the year’s biggest financial industry failure."

From the Bloomberg story, the downstream impact could be severe.
CIT said its collapse would put 760 manufacturing clients at risk of failure and “precipitate a crisis” for as many as 300,000 retailers, according to internal documents obtained by Bloomberg News.
The specific problem facing CIT is a cash crunch of its own.

Regulators in Washington now must decide whether to back CIT's debt, let the company fail, or find some middle ground.