CIT goes bankrupt. Poof! There go those TARP profits the Obama administration bragged about last month

by editor on November 5, 2009

Tim Geithner should remember the words of noted American philosopher and baseball pitcher Satchel Paige, "Don't look back. Something might be gainin' on you."

Tim Geithner should remember the words of noted American philosopher and baseball pitcher Satchel Paige, "Don't look back. Something might be gainin' on you."

Remember how the media happily bought the Obama administration’s TARP storyline back in August?

For example, this report from the New York Times:

As Banks Repay Bailout Money, U.S. Sees a Profit

Nearly a year after the federal rescue of the nation’s biggest banks, taxpayers have begun seeing profits from the hundreds of billions of dollars in aid that many critics thought might never be seen again.
The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually, according to calculations compiled for The New York Times.

That’s great news! TARP was pure genius. Give Obama a Nobel Prize in Economics to go on the mantel next to the Peace Prize. Except for one thing.

As the Naked Capitalist said, “Credit 101 is that your best borrowers repay first (unless you gave them overly generous terms, of course, then they might hang on to the proceeds). A quick but not conclusive search suggests that only a small portion of the TARP has been retired, so it is wildly premature to declare victory.”

Wildly premature, indeed, considering the latest news from Bloomberg:

CIT Files Bankruptcy; U.S. Unlikely to Recoup Money

CIT Group Inc., a 101-year-old commercial lender, filed for bankruptcy to cut $10 billion in debt after the credit crunch dried up its funding and a U.S. bailout and debt exchange offer failed.

CIT listed $71 billion in assets and $64.9 billion in debt in a Chapter 11 filing in U.S. Bankruptcy Court in Manhattan. The U.S. Treasury Department said the government probably won’t recover much, if any, of the $2.3 billion in taxpayer money that went to CIT.

So the government made $4 billion on the “good” loans to eight banks, but lost $2.3 billion of that profit on one bad loan to one bank. Factor in that hundreds of banks that received TARP loans are reportedly in deep financial trouble and there’s only one conclusion:

This will not turn out well. Not for anyone.

Source: New York Times, Bloomberg, Naked Capitalism

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Pittsburgh Z
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Pittsburgh Z

What the hell kind of pose is that?? Could he look any more gay?

Probably wishing he could put on his Peter Pan costume from junior high and fly away to Never Never Land.

juandos
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juandos

Remember now its all Bush’s fault!!